EDWARD C. SARNO, CPA/ABV, ASA, CBA
Accounting and Taxes ♦ Business Valuations
SAMPLE ENGAGEMENT LETTER –
November 1, 1987
__________ (Company name and address)
Dear Mr. _______:
This letter outlines our understanding of the terms and objectives of the valuation
engagement. I will perform a valuation to estimate the value of 100 % of the common stock
and 40% of the common stock of ____________ (company name). The date of this appraisal
will be as of _________________ . This is a valuation of a single stand-alone Company,
which is a Pennsylvania S corporation. The standard of value employed will be “fair market
value” which is defined as follows:
The amount at which property would change hands between a willing seller and a
willing buyer when neither is acting under compulsion and when both have
reasonable knowledge of the relevant facts on or about the valuation date.
The scope of this assignment will involve a comprehensive level of due diligence and the
issuance of a letter report, in conjunction with the current succession and estate planning of
the Company. This report will not be distributed to outside parties to obtain credit or for any
other purposes. If for any reason I am unable to complete the valuation engagement, I will
not issue the report.
I have no responsibility to update my valuation report for events and circumstances that
occur after the valuation date or the date of its issuance.
At the start of this engagement, I will provide a list of documents and data that are required.
Delays and difficulties in providing such documents and data may result in the delay in the
issuance of the valuation report or an increase in the fee amount quoted on the next page.
In performing my valuation, I will be relying on the accuracy and reliability of historical
financial statements, forecasts of future operations if available, or other financial data of the
company. I will not audit or review the financial statements, forecasts or other data, and I
will not express an opinion or any form of assurance on them. Our engagement cannot be
relied on to disclose bookkeeping errors, irregularities, or illegal acts, including fraud or
defalcation that may exist.
EDWARD C. SARNO, CPA (a Professional Corporation)
1240 West Chester Pike, Falcon Building, Suite 210, West Chester, PA 19382
Voice 610-429-3322 ♦ Fax 610-429-3340 ♦ sarnocpa.com
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In developing my value estimate, I will contemplate that the value of the machinery and
equipment, and the furniture and fixtures will approximate the net book value as shown on
the books of the Company. If I encounter unusual circumstances that would require me to
expand the scope of the engagement, I will discuss this with you before doing the additional
My valuation report will state that my fee is not contingent on the values determined by this
engagement. Fees for such services are billed at our standard hourly rates in effect. The
fee for these specific services will not exceed $ plus direct expenses which
typically do not exceed $ . I require a retainer in the amount of $ due with
the signing of this engagement letter.
In addition, this valuation engagement does not include any services that may be required
defending my valuation report in litigation, including conferences, depositions, court
appearances, and testimony.
If you agree with the foregoing terms, please sign the copy of this letter in the space
provided and return the letter to me.
I sincerely appreciate this opportunity to be of service to you,
Edward C. Sarno
This letter correctly sets forth the understanding of ____________ (Company
name) and Mr. ________
Title ___ _ _ ____
Date _______ _____