A business appraisal is a “supportable opinion as to the value of an asset or all of the assets of a business.”

The reasons for needing an appraisal are as varied as the clients requesting them. They are used for a multitude of purposes including determining the value of a business for succession planning, sale or purchase, estate planning or settlement, mergers or acquisitions, marital proceedings, litigation, financing, and internal buy/sell agreements.

There are many benefits to having a business appraisal done by an independent business appraiser who specializes in the funeral industry. Such an appraisal does not replace the work of an accountant or attorney. Rather, an independent appraiser can provide a unique perspective which can be used in conjunction with accounting and legal advice. Capable accountants and attorneys are able to evaluate the quality and practicability of an appraisal, but seldom do they possess sufficient specialized knowledge of a particular funeral business to enable them to appraise its unique value. Our appraisal service often is utilized by accountants or attorneys because they believe that an independent appraisal will help them and their client in making decisions.

American Funeral Consultants offers four types of Business Appraisals based on 3 to 5 years of the firm’s financial statements & tax returns.

We base your appraisal on relevant market data using accepted methods of appraisal to determine the fair market value for the funeral business. In addition to the financial information needed, you will receive a questionnaire to complete and that will provide us with important information needed for the valuation to be carried out. Clients receive a formal Engagement Agreement and a Confidentiality Agreement precisely outlining the assignment, the fee, and assuring complete confidentiality throughout our assignment and beyond.

We offer the following four types of appraisals:

1) A Letter Report is a statement which presents a single estimate of value for the business based on three years of financial data. It is approximately two to three pages in length. A formal site visit and community market analysis is optional, but not common with a Letter Report.

2) An EBIDT Appraisal Report (Earnings Before Interest, Depreciation, and Income Taxes) often is recommended as a first step in your succession plan, especially when working toward the contemplated sale (or purchase) of a business. Through a specialized income or investment value approach, the Reports specifically determines a sale (or purchase) price that we deem fair and reasonable for the business. This approach uses a firm’s earnings and cash flow as the basis for establishing its value. The general principal on which this method is based is that income can be analyzed according to the dividend-paying or “earning” ability of the revenues of the business. An EBIDT Report is typically is based on 3 or 4 years of financial data. It includes a discussion of the overall desirability of the firm based on many factors that are explained in detail. In addition, the Report makes recommendations to assist in decision-making after a sale or purchase. Specifically, the Report discusses what budgetary changes would be necessary or advantageous for a new owner and this is presented in the format of a projected Pro Forma. A formal site visit and community market analysis is optional, but not common with an EBIDT Report.

3) An Abbreviated Appraisal Report is a narrative appraisal using two or three methods of evaluation based on three years of financial data. Such an appraisal is typically used for internal planning purposes or for updating a previous appraisal. A formal site visit and community market analysis is optional with an Abbreviated Appraisal.

4) A Regular Appraisal Report is a narrative appraisal using at least three methods of evaluation based on five years of financial data. The text is typically lengthy and describes the steps used to derive the various estimates of value and explains the financial tables which analyze the business. A Regular Appraisal Report includes an extensive discussion of the business operation, and it provides comments and suggestions about the various elements of business worth, and makes recommendations to assist in future decision-making. A formal site visit and community market analysis is fairly common with a Regular Appraisal.

All of our appraisal reports will discuss the firm’s real estate. In most cases, we carry out an imputed valuation of the real estate which is based on an income approach to valuing it. Typically, the real estate is examined as if the highest and best use is the funeral home. However, for some unique circumstances, it may be advisable to have a real estate appraisal done by a qualified local real estate appraiser. If this is the case, we will let you know.