How to Prepare a Valuation Report: Step-by-Step Guide for Startups & Businesses

A valuation report is essential for fundraising, mergers, ESOPs, or compliance purposes. Begin by defining the purpose of valuation—this determines the method used. Collect key documents such as financial statements, business projections, cap table, and industry data. Choose a suitable valuation method—Discounted Cash Flow (DCF), Comparable Company Analysis, or Asset-Based Valuation, depending on your business type and stage. Conduct a thorough financial analysis, project future cash flows, and apply discount rates. Clearly document assumptions, valuation approach, and final value with justifications. Ensure the report complies with applicable laws like Income Tax Act Section 56(2)(viib) and FEMA, if cross-border transactions are involved. Lastly, have the report reviewed and signed by a Chartered Accountant, Merchant Banker, or Registered Valuer, depending on the regulatory requirement.