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FAQ

1. How long does an appraisal take?

2. What does an appraisal report include?

3. What are the primary determinants of value?

4. What guidance is available on valuation techniques?

5. What information is required for a 409A / 123R appraisal?

6. What information is required for an appraisal of intangible assets related to an acquisition?

7. What are the steps to engaging Orchard Partners and having the appraisal completed?

8. How much does an appraisal cost?

9. What does Orchard’s organization look like?



1. How long does an appraisal take?

It’s important to agree to a delivery date up front, so the report is ready when it’s needed. Establishing a delivery date requires that we balance two goals: the requirement for a thorough analysis and the need for timely reporting.
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2. What does an appraisal report include?

The report includes a description of the company and its industry, an overview of the economic environment, a review of the company’s historical financial performance and a presentation of its current financial condition. Valuation terms and methods are introduced and briefly explained. These methods are applied and presented in a series of spreadsheets with sufficient detail so that management and the auditor can check the calculations.
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3. What are the primary determinants of value?

Future cash flows and the level of risk associated with realizing those cash flows are critical. Management can improve the quality of a valuation by providing the appraiser with a detailed forecast. Recent transactions in the shares, including the pricing of preferred stock, often provide the best market indications of value.
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4. What guidance is available on valuation techniques?

Business valuation is the subject of numerous books, articles, journals and conferences. When valuations are used for financial reporting purposes, several documents provide important guidance. SFAS No. 157 is the accounting statement for “Fair Value Measurements.” It defines fair value and provides an overview of valuation techniques. The AICPA has published Valuation of Privately-Held-Company Equity Securities Issued as Compensation. For venture-backed companies, this practice aid provides guidance on how to allocate equity value between common and preferred shares. Another practice aid published by the AICPA is Assets Acquired in a Business Combination to Be Used in Research and Development Activities: A Focus on Software, Electronic Devices, and Pharmaceutical Industries. In addition to addressing issues associated with valuing in-process R&D, this practice aid is a useful guide for valuing other types of intangible assets.
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5. What information is required for a 409A / 123R appraisal?

Click to download a request for information.
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6. What information is required for an appraisal of intangible assets related to an acquisition?

Click to download a request for information.
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7. What are the steps to engaging Orchard Partners and having the appraisal completed?

At the beginning of the assignment, Orchard Partners will provide an engagement letter and request for information. Most clients elect to deliver the information electronically. As we receive the information, we begin our analysis and prepare a draft report. Often, we’ll ask follow-up questions by email. Once a first draft is reasonably complete, we schedule a meeting with the client for two purposes: to gather more information through a due diligence interview and to provide the client with an overview of the report and its contents. Clients have an opportunity to review the draft report, ask questions, test assumptions and if necessary, ask the auditor to review the report as well. At the conclusion of the engagement, Orchard provides the client with a signed report which includes a formal opinion of value.
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8. How much does an appraisal cost?

Orchard charges a fixed fee for each appraisal. The fee covers the cost of producing the report, reviewing it with management and responding to any questions from the auditor. For clients requiring annual, semi-annual or quarterly updates, we can develop a pricing plan that recognizes the economies of repeat engagements.
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9. What does Orchard’s organization look like?

Every opinion from Orchard is prepared and signed by Joel Johnson, an Accredited Senior Appraiser with more than 20 years of valuation experience. Joel works with a team of independent contractors with expertise in finance and accounting to ensure that Orchard’s reports are accurate and delivered on time.
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