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Seeing Is Believing: Site Visits Are A Critical Step In The Business Valuation Process

Valuing a business requires more effort than just plugging numbers from the financial statements into a spreadsheet or artificial intelligence software programs. Financial statements, tax returns, and marketing materials tell only part of the story that a valuation professional needs to develop a comprehensive understanding of business operations.. Therefore, site visits can help bridge the gap, especially in adversarial situations.

Touring The Facilities
During site visits, valuators tour the company’s facilities with the following questions in mind:

  • Do the company’s operations appear efficient and organized?
  • Do employees and managers seem competent and productive or disgruntled, overworked, or adversarial?
  • Are there any capacity constraints?
  • What is the condition of the company’s property, plant, and equipment (for example, any obsolete, unused, unrecorded, or nonoperating assets)?
  • For retail operations, does the company have adequate signage, ingress-egress, and parking?


Generally, valuators prefer to wait until they’ve performed a cursory review of the financial statements and industry before scheduling tours. This can help them identify high-risk areas and operating trends to evaluate during visits.

Interviewing Company Personnel
A preliminary review of the company’s financial documents also can help the expert customize questions to ask management during the tour. Interview questions typically cover a broad range of subjects, including but not limited to:

  • Operations history
  • Management quality and compensation
  • Hiring practices
  • Technology
  • Marketing and sales programs
  • Methods of distribution
  • Condition of fixed assets
  • Historical financial performance
  • Accounting methods
  • Internal controls


Valuations are driven by future cash flow projections. So, valuators will likely also inquire about the company’s future strategic plans.

Managing Adversarial Situations
Unfortunately, business owners and managers sometimes object to valuators’ requests for site visits. For example, a divorcing business owner or a controlling shareholder in a dissenting minority shareholder lawsuit might refuse to allow the opposing expert to perform a site visit.

When management prevents a site visit, the refusal is typically listed as a limiting condition in the valuator’s written report. Such limitations compromise the reliability of the valuator’s conclusions and may even suggest to a judge that management is trying to hide something.

Seeing Is Believing
A site visit provides a hands-on opportunity to learn about the subject company’s operations and interview management. When unable to conduct a formal site visit, valuators miss the opportunity to observe important factors that might materially affect value. Examples include deferred maintenance, capacity constraints, and weak internal controls. For more information on the importance of conducting in-person site visits when valuing a business, contact us.

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