Case Study
A valuation engagement, end to end
An anonymized walkthrough of how a sell-side valuation mandate runs — scoping, reconciliation, normalization, triangulation and the counterparty's review. Composite of typical engagements; details altered and figures omitted to preserve confidentiality.
Written by CA Pranay Bhansali, Founder & Principal, Volaxi — Chartered Accountant (ICAI), former senior buy-side research analyst.
Last reviewed September 2026 · LinkedIn
The engagement in summary
| Stage | What it covers |
|---|---|
| Mandate | Independent valuation to anchor a sale memorandum, scoped in writing first. |
| Information | Reconcile statutory to management accounts before building anything. |
| Normalization | Every adjustment documented with evidence and a written rationale. |
| Approach | DCF and comparables built independently, then triangulated. |
| Deliverable | Short report plus working model, structured for counterparty review. |
| Review | The test is surviving the buyer's first week of diligence. |
01
The mandate and its constraints
A founder-owned services business was preparing for a majority sale. The advisor running the process needed an independent valuation to anchor the information memorandum and to pressure-test the offers that would follow. The constraints were typical of the lower mid-market: three years of statutory accounts, a management P&L that did not reconcile to them, and a four-week window before the memorandum went to buyers.
The engagement was scoped in writing before any data arrived: the analysis would support pricing judgment, not constitute a formal valuation opinion, and every normalization would be documented so a buyer's diligence team could retrace it.
02
Building the information base
The first week was spent on data, not models. Statutory accounts were mapped to the management P&L line by line, and every difference was either explained or flagged. A short, prioritized information request went to the management team rather than a generic data room index — twelve items, each tied to a specific valuation input.
This step decides the quality of everything downstream. A valuation built on unreconciled accounts produces a number that cannot be defended in diligence, whatever the model's sophistication.
Reconciliation
Statutory to management accounts mapped line by line; unexplained differences flagged before any analysis.
Targeted requests
Information requests tied to specific valuation inputs — customer concentration, contract renewals, owner remuneration.
Single source of truth
One agreed historical dataset, versioned, used by every schedule in the model.
03
Normalizing the earnings base
Reported EBITDA was adjusted to a maintainable figure before any multiple or discount rate was applied. The adjustments were conservative and documented: excess owner remuneration at market replacement cost, one-off project revenue, a below-market rent arrangement with a related party, and personal expenses run through the business.
Each adjustment carried a short written rationale and a reference to its evidence. The normalized figure was lower than the headline management number — which is precisely why the memorandum's pricing held up when buyers ran their own numbers.
04
Triangulating DCF and comparables
Two approaches were built independently and reconciled. A discounted cash flow model projected the maintainable earnings base forward on assumptions the management team had signed off, with the discount rate built up from a CAPM cost of equity including a size premium. A comparable-company approach applied multiples from listed peers and recent transactions, adjusted for scale and growth differences.
The two ranges overlapped, and the overlap became the valuation range presented in the memorandum. Where the approaches diverged, the reasons were documented rather than averaged away — divergence is information about which assumptions carry the value.
DCF
Maintainable earnings projected on signed-off assumptions; CAPM cost of equity with size premium.
Comparables
Listed peers and precedent transactions, adjusted for scale, growth and customer concentration.
Reconciliation
Ranges triangulated; divergence documented as information about value-driving assumptions.
05
The deliverable
The output was a short report and a working model. The report stated the range, the normalized earnings base, the key assumptions and the sensitivities — in that order, because that is the order a buyer's analyst will look for them. The model was structured so every input could be traced to its source and every adjustment to its rationale.
A valuation that cannot be reviewed is a liability in a process. The deliverable was built for the counterparty's scrutiny, not only for the client's use.
06
What the counterparty tested
Buyers challenged three things, in the order most processes do: the normalized earnings base, the working capital assumption, and the discount rate's size premium. Because each had been documented with evidence at build time, the challenges were answered from the file rather than reconstructed under pressure.
This is the practical test of a transaction valuation: not whether the number is high, but whether it survives a motivated counterparty's first week of diligence.
Commission this work
If you are preparing for a transaction and this is the standard of work you need behind your number, the next step is a scoped engagement — or a complimentary indicative valuation if you are still orienting the decision.
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