Who decides the specific valuation engagement type for business valuation reports?

The specific valuation engagement type for business valuation reports is determined by the engaging party and the valuation professional. This decision-making process takes into account the unique circumstances of the valuation, the purpose of the report, and the needs of the clients involved. The engaging party typically includes individuals or entities requesting the valuation, such as business owners, investors, or lenders, while the valuation professional, with their expertise, provides guidance on the most appropriate engagement type based on the specific context and objectives of the valuation.

A collaborative approach ensures that the valuation aligns with regulatory requirements, industry practices, and specific stakeholder needs, leading to more accurate and relevant outcomes. While entities like the Internal Revenue Service may provide guidelines for certain valuation scenarios, and standards set by organizations like FASB and industry guidelines provide a framework for how valuations should be conducted, these do not dictate the engagement type. Ultimately, it is the joint decision of the engaging party and the valuation professional that defines which specific valuation engagement type is most suitable for each situation.