Valuation Report

Definition

A valuation report is a formal document drafted by an accredited business valuator that establishes the value of a business according to recognized professional methodologies and standards. In Canada, the Canadian Institute of Chartered Business Valuators (CICBV) defines three levels of report, each corresponding to a distinct depth of analysis and reliability.

In French-language Quebec documentation, you’ll see rapport d’évaluation used for the same concept.

The three levels are: the calculation report (limited analysis, narrow scope, lowest cost), the estimate report (moderate analysis, reasonable assumptions), and the comprehensive report (full analysis, detailed report, highest credibility).

Why the valuation report matters in a business sale

For an owner thinking about selling, the valuation report plays several essential roles. First, it sets an objective reference point for the asking price. A price grounded in a professional valuation is more defensible in front of buyers and their advisors than a figure based on intuition or informal comparisons.

The appropriate level of report depends on the context. For a first exploration of your business’s value before going to market, a calculation report or a market value opinion prepared by a business broker can be enough. That kind of analysis gives you a realistic range at lower cost and lets you decide whether the timing is right to sell.

A comprehensive report, on the other hand, becomes recommended — and sometimes necessary — in certain specific situations: when buyer and seller can’t agree on price, in a family transfer where the Canada Revenue Agency could question the declared value, in a shareholder dispute, or when financial institutions require an independent valuation to finance the acquisition. The cost of a comprehensive report generally ranges from $15,000 to $50,000, depending on the size and complexity of the business.

What every seller should know

• A business broker can prepare a market value opinion based on comparable-transaction multiples in your sector — often the most pragmatic and least expensive starting point.
• If you go with a formal report, make sure the valuator holds the Chartered Business Valuator (CBV) designation from the CICBV, which attests to compliance with Canadian professional standards.
• A valuation report has a limited shelf life: market conditions, financial performance, and sector outlook evolve. A report older than 12 months should be updated before entering negotiations.
• Don’t confuse the value set in the report with the final sale price — the actual price also depends on transaction structure, market conditions, and the respective negotiating leverage of the parties.