Some of the major elements required for providing a valuation for a
company include: Valuation vs. Calculation reports, General
Standards Rule, and the Integrity and Objectivity Rule. Valuation
reports refer to a valuation conclusion rather than a specific number
of what the company is worth. A calculation report is an end result
based on the calculations provided that give a hard number of what
the company may be worth. The main difference is based on whether
the parties agree on the valuation of specific items of the
organization. The general standards rule includes the guideline that
financial service companies should only take on valuation if they can
reasonably complete the tasks with professional competence. This is
to circumvent companies from taking on a valuation process as extra
revenue without fully understanding whether they are able to
complete the process with professional competence. The integrity
and objectivity rule refers to the requirement to disclose whether the
valuation analyst may have a conflict of interest with other parties
throughout the process. This can be particularly detrimental if
someone close to the company or a buying party does the valuation
rather than a third party as they may take their associations into
account when traveling through the valuation process.
In terms of differentiation from other standard-setting bodies, the
SSVS provides an extremely comprehensive overview of the
valuation process requirements and includes references that expand
on their individual paragraphs. Other standard-setting bodies
typically have lots of material that is scattered about on their website
while the SSVS condenses this material into an easy to understand
document regarding this specific topic. The elements of the SSVS are
typically worded as more of a guideline based on qualitative inclusion
of different factors. Other standard-setting bodies typically include
quantitative-type rules required in financial reporting.
