BVCA / Framework
Draft practice framework
Six plain-language expectations for any business valuation. Useful to valuers, and to the lawyers, accountants and owners who read their reports.
Evidence before assertion.
A valuation report should be understandable, supported and open to testing. These six expectations describe what that looks like in practice. They are BVCA's own draft, written in plain English. They are not a substitute for the law, a court's rules or any professional body's standards that already apply to a valuer.
Define the job clearly
State the purpose of the valuation, exactly what is being valued and the date it is valued at.
- Who the report is for and what it will be used for
- The entity, shares or business interest being valued, including any minority or control position
- The valuation date, and the basis or standard of value used
Use evidence that fits
Rely on information that suits the business, its industry and the engagement, and say where it came from.
- Financial statements and management information, with the periods identified
- Market evidence, such as comparable transactions or listed companies, explained and sourced
- Industry and economic conditions at the valuation date
Explain the method and the judgement
Set out the approach, the key assumptions and the judgement calls, so a reader can see how the conclusion was reached.
- Why the chosen method suits this business
- Adjustments made to earnings or assets, and why
- Where a different reasonable assumption would change the answer
Disclose independence, conflicts and limits
Say plainly whether the valuer is independent, any relationship with the parties, and anything that limited the work.
- Relationships with the client or other parties, past or present
- Information that was requested and not provided
- Matters the valuer did not verify
Keep supporting papers
Keep working papers that support each step of the conclusion, so the work can be reviewed later.
- Calculations that reconcile to the figures in the report
- Copies or records of the evidence relied on
- A record of key discussions and information received
Write it to be tested
Report in language an informed reader can follow, check and challenge.
- A clear summary of the conclusion and the main drivers of value
- Defined terms and plain explanations of technical steps
- Figures that are consistent across every section
What happens next.
The draft will be open for comment from valuers, lawyers, accountants and business owners. When an independent council is appointed, it will decide what to adopt. Detailed practice notes and continuing professional development guidance come after that.