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You are a student in the CICBV Program of Studies who has ju…

You are a student in the CICBV Program of Studies who has just started working for a small accounting firm (Madson & Co.) Madson & Co. specializes in mergers and acquisitions of, and arranging financing for, small to mid-sized, owner-managed companies. You are about to head out for your lunch break when Marsha France, a partner and CPA in Madson & Co. stops you in the hall to tell you about some new work coming in. “Safety Inspections Limited (“SIL”) provides home and business security systems, armored car services, and security guard services to businesses throughout Southwestern Ontario. The company is owned by Mark Mitchell, who is one of my first cousins, and who I am quite close with. Mark is thinking about selling his business as he has learned that there is a lot of industry consolidation going on, and he has heard that significant premiums are being paid for businesses such as his. George Black, a CBV who worked here before you started, previously prepared a Calculation Valuation Report for Mark last year when he was considering selling SIL to the Managing Director at SIL. Mark has indicated that time is of the essence as industry players appear to be moving quickly. He would like Madson & Co. to prepare an indication of value within the next two weeks. Mark and I believe that this timeframe is reasonable given that George Black had prepared a valuation report for him just last year. I’ve told Mark that he can share any work product we prepare with the eventual purchasers of SIL, so that the purchasers of SIL can use the report as a basis for financing. Mark mentioned that he was also considering obtaining a quote from George Black, who is with a competing firm. He thinks that George might be in the best position to do the work. I told him in confidence that George was unreliable and technically very weak. If Mark happens to ask you, can you share that opinion? It would help if we were on the same page. Also, I think we can charge Mark a fee that is based on the value we come up with for this. I know you’re off to lunch, so let’s discuss this more this afternoon.” Required:In an informal memo (to yourself), arrange your thoughts on what options Mark has in terms of type of valuation report and level of assurance, as well as any potential issues you can identify above.