Why Are Site Visits Important For Business Valuation
The Washington Valuation Group explains why site visits and management interviews are necessary in the valuation of closely held companies. These are helpful to understand the company’s business and trading environment and to form an opinion on the risks that are likely to impact on revenue and profit projections calculated on historic performance.
In goes on to examine management interviews in some detail to cover the type of questions to which the valuer is seeking answers, and to address how those impact on the valuation. It also recommends speaking with accountants and other advisors to the business.
In a business valuation engagement, there are many steps in the process of developing an opinion, that the valuation analyst must/should take. One of them is a site visit and management interview. The purpose of sites visits and management interviews are to: (1) gain an understanding of the subject company’s operations and the economic reason for its existence and (2) to identify factors that will cause the company’s future results to be different from an extrapolation of its recent past results. Read the post.