Valuation critique and review

Valuation critique and review

In addition to providing valuation reports, Lotus Amity also provides critiques and reviews of reports prepared by other valuers. These critiques and reviews are often requested in commercial and family dispute matters. Reviews are provided to address the report of one valuer or multiple valuers.

The critique and review reports provided by Lotus Amity include process reviews to assess compliance with valuation standards such as the business valuation standard APES 225 and or the International Valuation Standards.

Lotus Amity also address the reasonableness of the value derived by the valuer. Matters addressed in value reviews often include the appropriateness and application of valuation methods, the reasonableness and correctness of assumptions and inputs and the consistency and sufficiency of evidence

Experience

Examples of valuation critique and review engagements include the following:

• Critique of a valuation report relating to a minority interest transaction dispute with an electrical equipment manufacturer. Report prepared as a Consulting Expert report. The report identified the aspects of the valuer’s report that were not compliant with the APES 225 valuation standards and the International Valuation Standards, including, engagement terms, valuation type, valuation approach adopted and application of approach. The report also identified inconsistencies between opinions and purpose,omitted information that should have been analysed, a lack of information relied upon, the limitations of the financial analysis,unsupported assumptions and independence and qualification issues.
• Critique of two valuer reports in relation to a transaction dispute with a distribution business in the renewables energy sector. Report prepared as an Expert Witness report for mediation. The report addressed issues including the basis of value, valuation date, assets being valued, valuation approach and application of approach, key man risk, analysis of earnings, assessment of future cash flows and normalisation adjustments. The report also dealt with rolling revenue trend, one-off revenues, inventory levels and inventory purchases, gross profit analysis, impact of inventory on gross profit margins, market salary and commissions for owner, monthly expense trend, assets transferred and liabilities assumed, payment for assets, working capital requirements and profit share analysis.
• Critique of a single expert valuation report of an import and export business and the application of funds. Lotus Amity prepared a shadow expert report critiquing the expert’s analysis of the business, projects, sales growth, valuation method, and assumptions.