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Business Owner
P.O. Box 1234
Anytown, USA 12345

Re: Business Valuation of Typical Building Supply, Anytown, USA

Dear Mr. Business Owner:

This letter is in response to your request for our opinion of the Fair Market Value of TYPICAL BUILDING SUPPLY. We are pleased to provide you with concepts of value for the business as set forth in this letter. It should be understood that the scope of our engagement has been somewhat limited and that business valuation is not a precise science. We have not undertaken a complete appraisal of the business. We have not appraised the individual assets of the business. The data set forth in this letter will help you to determine a reasonable value for the sale of the business.

We have arrived at our conclusion by looking at a variety of different standard valuation methods and then choosing the single most appropriate method for your business. Considering all the relevant circumstances of this case, we have relied on Capitalization of Earnings Method as the best indication of Total Entity Value. I have also included a copy of a Valuation Decision Tree which helps explain why I choose this method of valuation for your business. Based on the following analysis, the Fair Market Value of owners' equity of the TYPICAL BUILDING SUPPLY at July 31, 1997, was determined to be $1,345,719, rounded to $1,345,000.

FAIR MARKET VALUE
$1,345,000

We considered several different valuation approaches to determine the Total Entity Value calculation. Although each approach calculates value differently, each attempts to determine Total Entity Value. Therefore, each approach should be considered independently while all assumptions remain constant between all value calculations. Our selection of the Capitalization of Earnings Method and our fair market value opinion have been made with consideration given to all of the relevant facts. The following report describes the facts and reasoning upon which our opinion is based. Our Estimates of values and cash flows are subject to the Assumptions and Limiting Conditions set forth in this report.

Respectfully submitted,

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