How to Write a Company Background

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					                      TRUGMAN VALUATION ASSOCIATES, INC.
                 COMPANY AND INDUSTRY BACKGROUND INFORMATION


 Company Name:



 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.


                                               COMPANY BACKGROUND

 1.      Describe the company’s legal structure.

         Company’s legal name:

         Type of entity (corporation, partnership, proprietorship):



         Date of incorporation or formation:

         For corporations:

         State incorporated:

         Number of common shares authorized:

         Par value:

         Number of shares issued and outstanding:

         Number of treasury shares:

         Briefly describe other types of stock.




TVA-4                                                   Page 1 of 29                                             W/P REF.
2.      List the major stockholders, partners, or owners of the company and their percentage of ownership or number of
        shares owned.

                                                                                         % Ownership
                                  Name                                             or Number of Shares Owned




3.      List all known related parties (that is, subsidiaries, affiliates, or relatives) that the company does business with.


                                  Name                                                      Relationship




4.      List each location maintained by the company and the primary activity at each, that is executive office, plant, sales
        office, etc.

                                 Location                                                      Activity




TVA-4                                                    Page 2 of 29                                                 W/P REF.
 5.     Discuss evolution of:

        (a) Service or Product Lines




        (b) Customer Base




        (c) Locations




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        (d) Marketing Activities




        (e) Distribution Methods




        (f) Employees




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        (g) Acquisitions




        (h) Ownership




 6.     Other key dates or events in company history.




 7.     Description of the company’s products or services:




TVA-4                                               Page 5 of 29   W/P REF.
 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):


                                                                                                 Gross Profit
                                    Product                                   Percent of Sales   Percentage




TVA-4                                                 Page 6 of 29                                     W/P REF.
 11.    Which product line is growing faster?



        The slowest?



 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?

        Advantages:




        Disadvantages:




TVA-4                                              Page 7 of 29                       W/P REF.
 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?




TVA-4                                              Page 8 of 29                                            W/P REF.
 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?




TVA-4                                                  Page 9 of 29                                       W/P REF.
 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?




TVA-4                                                Page 10 of 29                                      W/P REF.
 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?




TVA-4                                                Page 11 of 29                                 W/P REF.
 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?




TVA-4                                               Page 12 of 29                               W/P REF.
        COMPETITION
 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?




TVA-4                                                 Page 13 of 29   W/P REF.
 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?




        OPERATIONS
 52.    Describe the company’s organization structure. (Attach organization chart, if available.)




TVA-4                                                Page 14 of 29                                  W/P REF.
 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?




TVA-4                                                Page 15 of 29                                 W/P REF.
 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?




TVA-4                                               Page 16 of 29                     W/P REF.
 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?




TVA-4                                                 Page 17 of 29    W/P REF.
 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?




TVA-4                                                 Page 18 of 29                                      W/P REF.
 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?

        Full-Time                                                 Part-Time

 77.    How has the number of employees changed over the past five years?




TVA-4                                                Page 19 of 29                                               W/P REF.
 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?




TVA-4                                                Page 20 of 29                                               W/P REF.
 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
        governments?




 88.    Discuss the effects of any federal or state regulation or subsidies on the company’s operations.




TVA-4                                               Page 21 of 29                                          W/P REF.
                                                   MANAGEMENT
89.     List key members of management.
                                 Name                                                       Title




90.     Discuss the company’s officers (age, health, education, experience, and current duties).
             Officer         Age        Health        Education              Experience             Duties




TVA-4                                                Page 22 of 29                                       W/P REF.
 91.    Discuss basis of compensation. Also, describe employee benefits (insurance, stock options, profit sharing,
        etc.).




 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?




TVA-4                                               Page 23 of 29                                              W/P REF.
                                                          FINANCIAL


 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?




TVA-4                                                Page 24 of 29                                                W/P REF.
 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.




TVA-4                                                Page 25 of 29                                             W/P REF.
 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.




TVA-4                                                 Page 26 of 29                                        W/P REF.
 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.




                                              COMPANY EXPECTATIONS


 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.




TVA-4                                               Page 27 of 29                                             W/P REF.
 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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TVA-4   Page 29 of 29   W/P REF.

				
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Description: How to Write a Company Background document sample