Quick answer
A defensible business valuation requires financial statements, tax returns, asset schedules, and debt documentation for at least 3-5 years, plus supporting evidence of customer concentration, key-person dependency, industry comparables, and any legal restrictions on ownership transfer. This checklist organizes the documents your appraiser will typically need. Check off what you have; the summary shows what is missing.
Valuation Evidence Checklist
A business valuation is only as defensible as the evidence supporting it. This checklist covers the document categories a qualified business appraiser typically requests. Check off items you have assembled. The checklist does not replace the appraiser's engagement letter, which will include requirements specific to your situation, purpose, and standard of value.
Documentation inventory
Financial statements (3-5 years)
Tax returns (3-5 years)
Asset and liability schedules
Ownership and legal documents
Revenue and customer data
Personnel and compensation
Industry and market context
Projections and forward-looking data
How a business appraiser uses this evidence
A qualified appraiser uses three approaches to value a business: the income approach (capitalizes or discounts future earnings), the market approach (compares to transactions or public company multiples), and the asset approach (adjusts book value to fair market value). Each approach draws on different subsets of this documentation. Financial statements and tax returns support income normalization; asset schedules support the asset approach; customer and market data inform the income and market approaches. An incomplete document set forces the appraiser to rely more heavily on assumptions, which weakens the defensibility of the concluded value.
Frequently asked questions
What documents are needed for a business valuation?
A business appraiser typically needs financial statements (income statements, balance sheets, cash flow statements) for 3-5 years, federal tax returns for 3-5 years, a current accounts receivable aging and payable aging, a fixed asset schedule, debt schedules, and any existing buy-sell agreements or prior appraisals. The appraiser may also request customer concentration data, a description of key employees and their compensation, and market comparables for the industry.
What is a qualified appraisal for IRS purposes?
A qualified appraisal for IRS purposes must be made no earlier than 60 days before the gift or sale date and no later than the due date of the return on which the deduction is claimed. It must be conducted by a qualified appraiser who meets education and experience standards. For charitable contributions of property over $5,000, a qualified appraisal attached to Form 8283 is required. For estate and gift tax transfers, a qualified appraisal is required for most closely held business interests.
What is a valuation discount for a minority interest?
A minority interest discount (also called a discount for lack of control) reduces the value of an ownership interest below its proportional share of the business value, because a minority owner cannot force the company to pay dividends, sell assets, or take other actions. A discount for lack of marketability may also apply to closely held interests that cannot be sold quickly. These discounts are legitimate under IRS and court precedent but must be supported by quantitative analysis, not assumed.