Business Valuation and Analysis

Running Head: BUSINESS VALUATION AND ANALYSIS
Business Valuation and Analysis
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BUSINESS VALUATION AND ANALYSIS 2
Critique of Article: Time to update the guiding principles to a valuation report. By Robert E.
Kleeman Jr. OnPointe Financial Valuation Group LLC, (Englewood, Colo, USA).
Key issues in the article
Business valuation and analysis is crucial in determining the economic worth of an
organization. Business reports contains data that communicates the overall status of the company
to the investors, customers, shareholders, and stakeholders (Trugman. 2016). Robert in this
article gives important information to report preparers and users that they can understand what is
contained in the pages of the valuation report. Initially, he listed four elements that a great
valuation report could contain. These are; Teach, Analyze, Communicate, and Opine (TACO).
However, to enhance the quality as well as the reliability of the report, he developed five key
principles (5 P’s); precision, practicability, plausibility, proficiency, and price (Robert, 2018).
Precision gives the exactness of a measure or its ability to be reproduced. The manner in
which the conclusion of value is written in a report, gives much information regarding the
validity of the appraisal. Usually, every case has its own issues that need to be addressed
separately. Therefore, it would be wrong to use the same exact method to measure the market
value of different items (Bancel & Mittoo, 2014). Robert further says that the evaluation report
should have a practical aspect rather than speculation. In plausibility, the assumptions used as
well as sources of information should be valid, credible, or acceptable. Consequently, the
valuation report should have a degree of proficiency and finally price determination should be
considered (Shannon, Pratt, & Roger, 2019). Valuation report should not be based on lies and
should be reproducible. Otherwise, if another appraiser cannot use the conclusions to arrive to
the findings of the report, then, it raises a lot of concerns. The report should be easily understood,

BUSINESS VALUATION AND ANALYSIS 3
help the reader to know the expertise and background of the appraiser, and the reliability of
sources of data determined.
Relation of issues in the article to the topics in this unit
The article addresses several issues regarding business valuation and analysis. This unit
introduced us into several topics regarding business valuation such as writing of business
valuation report, factors affecting business valuation, analysis of business valuation report,
auditing, and business ethics. This article, therefore, gives a deep understanding of what really
happens in real life issues. It explains challenges that appraisers encounter during writing of
valuation report and how we can overcome them. Additionally, it explains how one can write a
good report that can be understood by everyone and be reproduced. The article emphasizes on
the importance of using data sources that are credible so that the future projections regarding the
economy of the company can be correct (Botosan & Huffman, 2015). The case elaborates more
on dos and don’ts of appraisers when embarking on the journey of performing valuation reports
for various organizations. Therefore, the article has been of great importance in helping me
understand in-depth the topics we covered in this unit.
Evaluation of the main issues in the case study
The key issues raised in this article involves the five principles necessary for a
successful valuation report. This include; precision, practicability, plausibility, proficiency, and
price (Robert, 2018). These factors hugely impact the outcome of the report. It is important,
therefore, for an appraiser to follow these principles keenly so as to generate a valuation report
that has no contradictory information. For instance, many analysts tend to give a conclusive
value report that is 100%. However, naturally it’s difficult to attain 100% precision while