It matters most where the people relying on the figure have different interests, such as shareholders on opposite sides of a buyout, family members, trustees, HMRC, a lender or a court. Our role is to reach the figure the evidence supports and to explain it in a way that each of them can follow.
When is this valuation required?
- Shares are changing hands between connected parties, such as family members, co-directors or a company and its employees.
- Shareholders, partners or family members disagree on value and want a neutral view.
- Trustees, executors or directors need an objective figure to discharge their duties.
- A lender, investor or regulator expects a valuation from someone other than the owner or broker.
- You want a second, independent view of a figure produced by another adviser.
Who instructs us?
- Shareholders, families and business partners, sometimes jointly
- Directors and trustees with fiduciary responsibilities
- Accountants and solicitors who prefer an independent specialist
- Investors and lenders
What exactly is valued?
Independent valuations cover entire businesses, individual shareholdings, partnership interests and intangible assets. Because the parties may later scrutinise the conclusion, we take particular care to record what was valued, the basis of value, the valuation date and the information relied on.
How is value assessed?
Before accepting an instruction, we check for conflicts of interest and confirm who the valuation is for and who may rely on it. Where several parties are involved, we agree in writing how information will be shared and whether all parties may comment on matters of fact before the valuation is finalised.
The valuation itself applies the approaches appropriate to the business. Independence affects the process more than the method: assumptions are stated openly, alternatives are considered, and judgements are explained rather than presented as certainties.
How the approaches are usually weighed
Typical
- IncomeMaintainable earnings or discounted cash flowUsual starting point
- MarketComparable transactions and companiesCross-check
- AssetAdjusted net assetsWhere relevant
What factors influence the result?
- Who is relying on the valuation
- The basis of value and level of reporting depend on whether it is for one party, several parties or a third party.
- Disputed facts
- Where facts are contested, we can show how value changes under each set of assumptions rather than choosing between them.
- Connected-party terms
- Transactions between related parties may need a valuation on a market basis that ignores any special relationship.
- Information access
- Independence depends on balanced information. We set out what was requested and what was provided.
What information is required?
- Accounts, management information and forecasts
- Constitutional documents and agreements between owners
- Correspondence or proposals already exchanged on value, where relevant
- Details of all parties, so conflicts can be checked
We send a tailored information request once the scope is agreed.
What report will you receive?
The report records the scope of the instruction, our independence, the information relied on, the approach and assumptions, and the conclusion. Where parties may disagree, sensitivity analysis shows the effect of the key judgements.
See types of business valuation reports for how the scope of each type differs.
Timing and cost
How long will it take?
Independent valuations involving several parties take a little longer because agreeing the scope and gathering information from each party adds steps. We set out the timetable in our engagement letter.
How much does it cost?
Fees depend on the business, the number of parties and the reporting required. Where several parties instruct us jointly, the fee arrangement and who is responsible for paying it are agreed in writing at the outset.
How our fees are set →Frequently asked questions
What makes a valuation independent?
The valuer has no financial interest in the outcome, no conflicting relationship with the parties, and reaches a conclusion based on the evidence rather than on what any party would prefer.
Can we instruct you jointly?
Yes. Joint instructions are common where two or more parties want a neutral figure. We agree the terms, information sharing and fee arrangements in writing with all parties.
Is an independent valuation the same as an expert witness report?
No. An expert witness report is prepared for court proceedings under specific procedural rules. An independent valuation may be used to avoid proceedings or to support a negotiation. We can advise which you need.
Can you review a valuation someone else has prepared?
Yes. We can review the method, assumptions and evidence behind another valuation and explain where we agree, where we differ and why.
Will you tell us what the business is worth to a particular buyer?
We can, but that is a different question. An independent valuation normally applies market value, which reflects a hypothetical typical buyer. Value to a specific buyer may be higher or lower, and we make the distinction clear.
