Once a valuation has been initiated, one of the critical tasks is to collect and assemble the requisite data. Generally speaking, this vital data may be categorized into the following three groups:

1. Data that is specific to your company;

2. Data about your company’s industry and economic conditions; and

3. Data about the market for ownership interests.

The company-specific data should appear in written form, gathered from on-site visits and interviews with those who are knowledgeable about the company. The industry data are generally provided by the company and may also be available from public sources. Data concerning the market for ownership interests should include information about changes of ownership in competing firms, certain company transactions and various other factors (e.g., premiums or discounts) that might apply to the property.

The manner and timing of the data-gathering process can be significant. Most important, the process must be both thorough and efficient. For example, supporting analysts may be in the process of collecting data about the industry, various economic factors, the company’s rate of return and company transactions. At the same time, the principal analyst may be working directly with the company’s owners and top management team. These efforts must be coordinated to present a true overall picture.

In any case, it is important for the business to reflect a balanced overview at an early stage in the proceedings. This way, all the analysts will be able to recognize important data as they progress with the valuation process.

When time permits, information that is being collected should be reviewed before any of the analysts formally visit the company. Then the focus can be shifted to the critical process of interviewing at the company’s site without being sidetracked by tangential issues. The goal is to minimize the inconvenience of the interviews while maximizing the productivity from visiting the physical property.

Much of the information needed to conduct a business valuation will be obtained through these interviews with company management. However, the consultations are usually corroborated by inspections of documents on the business premises. Copies may be required to obtain the information necessary to the task.

Obviously, this is only a brief overview. Contact a tax professional experienced in business valuation for more detailed information about the data-gathering process.