AICPA SSVS No. 1 / VS Section 100 — valuation vs calculation engagement
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Quick Answer
The AICPA's valuation standard distinguishes a valuation engagement, which produces a conclusion of value, from a calculation engagement, which produces a calculated value using agreed limited procedures.1
What it is
In a valuation engagement the analyst selects the approaches they judge appropriate. In a calculation engagement the analyst and the client agree the procedures in advance, and the deliverable is correspondingly narrower in what it may be used for. A number produced by an intermediary marketing a business is neither engagement type.1
Operational context
What good looks like
Why It Matters
The engagement type is the first thing to check on any valuation handed across a deal table, because it determines what the document is actually asserting.1
Frequently Asked Questions
What is AICPA SSVS No. 1 / VS Section 100 — valuation vs calculation engagement in venture capital?
In a valuation engagement the analyst selects the approaches they judge appropriate. In a calculation engagement the analyst and the client agree the procedures in advance, and the deliverable is correspondingly narrower in what it may be used for.
Why is AICPA SSVS No. 1 / VS Section 100 — valuation vs calculation engagement important for startups?
Understanding AICPA SSVS No. 1 / VS Section 100 — valuation vs calculation engagement is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Sources & References
- 1.T2-08 — AICPAAICPA Statement on Standards for Valuation Services (SSVS) No. 1 / VS Section 100AICPA(The AICPA's valuation standard distinguishes a valuation engagement, which produces a conclusion of value, from a calculation engagement, which produces a calculated value using agreed limited procedures.)primary · T2 · valuation · rule
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