Business Valuation

Running Head: BUSINESS VALUATION 1
Business Valuation
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BUSINESS VALUATION 2
Part I
The article deals with the principles that should be applied in preparing and evaluating
business valuation reports. The target audience of this article are business appraisers and
evaluators of valuation reports. The article discusses five principles which have been developed
from previously existing four elements of a good valuation report by the same author. The four
elements are; teach analyze, communicate, and opine (Kleeman jr, 2017). The five principles are
aimed at helping valuation experts in ensuring the overall quality and reliability of valuation
reports ((Kleeman jr, 2017). The article also presents a summary of questions that guide one in
evaluating the quality of a valuation report.
The five principles discussed in the article by Kleeman jr (2017) are; first, precision
which discusses the quality aspect of a valuation report being accurate. This principle gives
reference to revenue ruling 59-60 which defines guidelines of performing a sound valuation.
Second, practicality principle which defines the quality aspect of a valuation report being put
into practical use. Third, plausibility principle which defines the quality aspect of the appraiser’s
assumptions being acceptable and credible. Fourth, proficiency principle which discusses the
quality aspect of the appraiser having sufficient competence in valuation. It argues that the
competence of the appraiser should be clearly demonstrated in the valuation report. Fifth, the
price principle which discusses how pricing of valuation services relates to the quality of
valuation reports.
Part II
The article relates to the topics in business valuation in the following ways; first, it
provides a deep analysis of various aspects of a business that should be considered when

BUSINESS VALUATION 3
conducting valuation. This is agrees with Matschke, Brösel, & Matschke, (2010) who argue that
considering only a few factors in business valuation can lead to biased results which are
unreliable. Secondly, the article provides guidelines that can help appraisers in developing
plausible assumptions during valuation. This is a key concept in this unit since it defines the
metrics under which an assumption during valuation can be acceptable (Olbrich, Quill, & Rapp,
2015).
Third, the article covers the concept of the practicability of valuation reports under the
practicality principle which is a key issue in this unit. According to Srinivasa Reddy, Agrawal, &
Nangia (2013), the ability of the users of a valuation report to understand it and create meaning
out of it depicts the essence of the entire valuation process. Fourth, the article gives reference to
revenue ruling 59-60 which provides a legal foundation in valuation. By recognizing this ruling
the article proves to be relevant in this unit. Fifth, the article has discussed the impact of
competence in valuation which is also an important concept in this unit.
Part III
According to Hart (2018), while evaluating literature one should always consider how the
literature has contributed to the body of knowledge. Therefore, in evaluating the article several
factors were put into considerations which are; first, the relevance of the article. This refers to
how the main issues in the article relate to business valuation concepts. In this case, the five
principles discussed were the main issues of the article. Secondly, how the article relates its main
issues to real-world concepts by providing examples.
Third, how the main concepts discussed in the article are organized, in which case the
article has organized them consistently. Fourth, how easily the article is understandable to the