A valuation report, in the sense this hub means, is the working document an owner or a buyer writes to show how they reached a number: the earnings and the add-backs line by line, the multiple entered and where it came from, the inventory and equipment on their own lines, the value at two or three multiples as a range with a midpoint, and the sources for each figure. A business valuation report of that kind is not an appraiser's signed opinion and does not claim to be; it is the document that makes the owner's number readable by the person across the table. This page says what the report has to contain, gives a business valuation example on the hub's own figures, and points at the free business valuation template on this site that prints one, with no account.
What a business valuation report has to contain
The business and the date; the source of the figures, the trailing twelve months' statements or the tax return; the net income and each add-back as a line with its reason, reaching the discretionary earnings; the multiple entered and the evidence for it, a broker's quote, a known sale, a rule of thumb the owner applies; the inventory at cost and the equipment at agreed value as separate lines; the value at the low, the entered and the high multiple, with the midpoint; and what the report is for, a listing, an offer, a buy-in. A company valuation report with those parts can be read in five minutes and argued line by line; one without them is a number with a cover page. The IRS Schedule C is the source document for a sole proprietor's figures.
A business valuation example on the hub's figures
Net income $120,000; add-backs: owner salary and benefits $40,000, interest $15,000, depreciation and amortization $20,000, personal expenses $5,000, one-off legal costs $10,000; less non-recurring contract revenue $30,000; seller's discretionary earnings $180,000. Multiple entered: 2.5, from a broker's quote for the trade, with 2.0 and 3.0 as the range. Inventory at cost $36,000. Value at 2.0: $360,000 plus $36,000, $396,000; at 2.5: $486,000; at 3.0: $576,000; midpoint $486,000. Purpose: an asking price for a listing. That is the whole report, and the business valuation template on this site prints it in that order from the figures entered.
Valuation reports over time: what changed
An owner writes a valuation report more than once, and the useful thing about the second is the comparison with the first: the earnings moved, the add-backs moved, the multiple moved with the market or the evidence, and the value moved for a reason the report shows. Business valuation reports kept as a sequence are the owner's own record of the business's worth, dated, and they are what the buyer, the partner or the accountant asks for when the number is questioned. The free template prints one report with no account; the paid plan files each against the business and the date, branded and exported, so the sequence exists without the owner keeping it by hand.
What the report is not, and when a signed one is needed
The working report is the owner's or the buyer's own arithmetic, shown. It is not an appraisal under the standards a court, an estate or gift tax return, a 409A or a lender's file requires, and for those a credentialed appraiser's signed report is needed, which this hub refers out. The two are not in competition: the appraiser starts from the same statements and the same add-backs, and an owner who hands over a working report has saved the appraiser's first week. The Financial Accounting Standards Board's standards govern fair value as it appears on financial statements, and the Small Business Administration's guide to selling a business, also linked, covers the sale the report is usually written for.
Questions people ask about valuation report
What should a business valuation report include?
The business and date, the source statements, net income and each add-back with its reason, the multiple entered and its evidence, inventory and equipment as separate lines, the value at three multiples with a midpoint, and the purpose. The free template prints it in that order.
Is this a signed appraisal?
No. It is the owner's or buyer's working document, for listings, offers and buy-ins. Courts, estate and gift tax, 409A and lenders need a credentialed appraiser's signed report, which the hub refers out.
Can I see a business valuation example?
On the hub's figures: $180,000 of discretionary earnings from $120,000 of net income and the add-backs, a 2.5 multiple with 2.0 and 3.0 as the range, $36,000 of inventory, and values of $396,000, $486,000 and $576,000 with a $486,000 midpoint.