TRUGMAN VALUATION ASSOCIATES, INC.
COMPANY AND INDUSTRY BACKGROUND INFORMATION
Completed by: Date:
INSTRUCTIONS: This form covers the data typically needed to obtain an understanding of the company being valued and
its industry. This information should be obtained through reviewing company documents and interviewing company
personnel. Complete only those sections that apply. Use TVA-5 if a professional practice is being valued, or TVA-6 if a
family limited partnership is being valued.
Document the requested information in the space provided. Attach additional sheets if necessary. If the information is not
relevant, write N/A in that space.
1. Describe the company’s legal structure.
Company’s legal name:
Type of entity (corporation, partnership, proprietorship):
Date of incorporation or formation:
Number of common shares authorized:
Number of shares issued and outstanding:
Number of treasury shares:
Briefly describe other types of stock.
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2. List the major stockholders, partners, or owners of the company and their percentage of ownership or number of
Name or Number of Shares Owned
3. List all known related parties (that is, subsidiaries, affiliates, or relatives) that the company does business with.
4. List each location maintained by the company and the primary activity at each, that is executive office, plant, sales
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5. Discuss evolution of:
(a) Service or Product Lines
(b) Customer Base
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(d) Marketing Activities
(e) Distribution Methods
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6. Other key dates or events in company history.
7. Description of the company’s products or services:
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8. How are the products or services used?
9. Describe the company’s customer base.
10. Breakdown of sales and gross profit by product line (major products only):
Product Percent of Sales Percentage
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11. Which product line is growing faster?
12. How diversified are the product lines?
13. Do all sales depend on the same factors?
What are the products’ advantages and disadvantages versus its competitors?
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14. Are the products proprietary?
15. Does the company have patents, technology, or expertise that prevent others from copying the products?
16. What other products compete with the company’s products?
17. Are sales cyclical?
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18. What economic factors (inflation, interest rates, etc.) affect sales?
19. Are sales seasonal?
20. Discuss any industry technology trends.
21. Discuss the company’s research and development efforts, the importance of new products, and the annual cost
of research and development activities.
MARKETING AND DISTRIBUTION
22. What is the size (in dollars) of the market in the industry?
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23. What is the company’s market share?
24. How fragmented is the market?
25. Is the market growing or shrinking?
26. What distribution channels does the company use (direct sales, distributors, retailer, etc.)?
27. How successful are they?
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28. How are sales people compensated?
29. What is the market area and what determines its size?
30. How important are freight costs?
31. Are sales concentrated in a few customers?
32. How loyal are customers, that is, do they tend to buy from the same company or switch?
33. How does pricing affect customer loyalty?
34. Does the company sell to the federal, state, or local government or government agencies?
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35. Are those sales likely to increase or decrease?
36. What is the key selling feature–produce, price, service, brand name, packaging, etc.?
37. How are pricing policies determined?
38. To what degree do competitors’ prices affect company policy?
39. What are normal sales and credit terms?
40. Describe a typical customer contract.
41. What type of promotion and advertising methods does the company use?
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42. Who are the company’s major competitor?
43. Where are they located?
44. How big are they?
45. What is their market share?
46. How diversified are they?
47. Are any of those competitors publicly held?
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48. How does the company compare in size and market share to its competitors?
49. How easy is it to enter the industry?
50. What are the barriers to entry?
51. What are the company’s competitive strengths and weaknesses?
52. Describe the company’s organization structure. (Attach organization chart, if available.)
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53. What is the relative size of the company’s division in terms of sales and gross profits?
54. How interrelated are the divisions?
55. How much vertical integration is there among the divisions?
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56. How easily can a division be eliminated without affecting other operations?
57. How old are the company’s manufacturing facilities?
58. Where are they located relative to the primary markets?
59. Describe the manufacturing or service process.
60. Are any of the methods or equipment proprietary?
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61. What is plant capacity relative to current operating levels?
62. How many shifts and days per week does the company operate?
63. Might sales be constrained by inadequate capacity?
64. Is there excess capacity or excessive fixed overhead costs?
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65. Are buildings and machinery owned or leased? If leased, are the leases renewable and on what terms?
66. Provide details about the facilities. What is the square footage?
67. How many stories is the building?
68. Is the current facility adequate for the level of business being projected?
69. What is the overall condition of the company’s equipment?
70. Is there any inefficient or obsolete equipment?
71. When is the machinery likely to be replaced?
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72. What is the likelihood of major repairs?
73. How capital-intensive is the company?
74. How labor-intensive?
75. Briefly describe past and current employee relations (that is, contentious, harmonious, strikes, etc.). Also
discuss employee turnover and indicate whether any of the employees are unionized.
76. What is the number of employees on the payroll at the valuation date?
77. How has the number of employees changed over the past five years?
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78. What are the immediate needs of the company with respect to hiring additional personnel?
79. Are there any non-working relatives or friends on the payroll? If so, what are the names and levels of
compensation for the years being analyzed?
80. Discuss the current labor market. How easy is it to attract qualified employees?
81. How extensively are independent contractors used?
82. Discuss key suppliers.
83. Are any suppliers the sole source?
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84. Have there been any major problems in getting raw materials?
85. Are there long lead times to get the purchased goods?
86. Does the company have difficulties complying with environmental regulations?
87. Does the company have any foreign operations? If so, does the company have any problems with any foreign
88. Discuss the effects of any federal or state regulation or subsidies on the company’s operations.
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89. List key members of management.
90. Discuss the company’s officers (age, health, education, experience, and current duties).
Officer Age Health Education Experience Duties
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91. Discuss basis of compensation. Also, describe employee benefits (insurance, stock options, profit sharing,
92. Discuss any employment contracts (get copy).
93. How easily can officers be replaced (i.e., is there one or a few key officers on which the success of the company
depends that cannot be easily replaced)?
94. Who is on the board of directors and how active is the board in governing company activities?
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95. Describe the nature of any financial statement qualifications or unusual matters noted in reviewing the
company’s financial statements that may affect the engagement.
96. Has there been any change in accounting principles during the past five years (cash to accrual, FIFO to LIFO,
etc.) or similar changes that might affect the comparability of the financial statements?
97. Describe any relevant specialized industry accounting practices or principles.
98. Have there been any nonrecurring or extraordinary income or expenses during the period of financial review?
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99. Describe short-term sources of credit and how they were used during the last five years.
100. Describe long-term sources of credit and how they were used during the last five years.
101. Discuss any special stock rights, warrants, options, etc.
102. Discuss the company’s dividend history.
103. Have there been any transactions involving interests in the company in the last five years? Provide details.
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104. Describe any written or oral offers received for the company in the last five years.
105. Discuss any plans to sell all or part of the company or hold a public offering.
106. Discuss plans for major capital expenditures, how they will be financed, and how much represents expansion
versus replacement of existing assets.
107. Discuss any contingent liabilities, including lawsuits and pending or threatened litigation.
108. Describe any nonoperating assets, such as aircraft, boats, and real estate investments.
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109. Describe relevant past and expected future trends for the company, such as growth patterns, expansion or
cutbacks of business segments, possible spinoffs, mergers or acquisitions.
110. Describe the company’s future expectations, goals, objectives, and long-range plans in the following areas:
Products and services.
Marketing and customers.
R&D and technology.
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111. Is there anything else that we should know in order to perform this valuation?
COMMENTS AND OBSERVATIONS
112. Describe any matters to be considered in applying the valuation methods selected. Factors to consider include:
1. Growth expectations.
2. Financial condition.
3. Management depth and competence.
4. Product, customer, and geographic diversification.
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