Valuation is usually evaluated based on its end result; however, the real value of a valuation is determined based on the quality of documentation that supports the valuation process. A good documentation for the valuation opinion involves much more than having proper methodologies and computations; it involves keeping documentation about the underlying assumptions, evidence, judgments, and processes used during the valuation process. This helps stakeholders not only in evaluating the result of the valuation process, but also in understanding how the result was obtained.
Within the context of growing scrutiny on regulation, auditing, and stakeholders, proper valuation documentation has emerged as a critical part of practice rather than a mere formality. The preparation of a valuation for purposes of accounting, taxes, legal disputes, M&A transactions, or strategic decision making requires one to be able to show the rationale behind the valuation conclusion. This paper looks at the
