A business appraisal may include an analysis of a company's management, its capital structure, its future earnings prospects or the market value of its assets. The tools used for appraisals can vary between appraisers, businesses, and industries. Common approaches to business valuation include reviewing financial statements, discounting cash flow models, and similar company comparisons.
Assessment is also important for tax reporting. The Internal Revenue Service (IRS) requires that a business be valued based on its fair market value. Certain tax-related events such as the sale, purchase or gifting of shares of a company will be taxed on a valuation basis.