The concept behind my “Grade Me” framework is straightforward: Valuation professionals can improve report quality by reviewing their work from the perspective of an informed reader who does not have the preparer’s background knowledge. A structured 30-minute review can identify issues before they become client concerns or litigation problems. Every valuation report is eventually reviewed by someone other than the person who prepared it. The reviewer may be a firm partner, a client, opposing counsel, a trier of fact, a regulator, a credentialing organization, or another valuation professional. Each reviewer approaches the report with a different perspective, but all are…
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Errors in the enterprise-to-equity bridge may cause cash, debt, working capital, or non-operating assets to be counted twice, omitted entirely, or treated inconsistently among valuation approaches. These errors can be particularly significant in litigation and marital dissolution matters, where the ultimate question is generally the value of a specific ownership interest rather than only the value of the company’s operations. A business valuation may employ an appropriate methodology, a reasonable benefit stream, and a supportable discount rate or market multiple, yet still arrive at an incorrect conclusion of equity value. One of the most common reasons is an error in…