Business Valuation Engagement Letter Template for Indonesia

A Business Valuation Engagement Letter under Indonesian law is a formal document that establishes the professional relationship between a qualified valuation firm and its client for the purpose of conducting a business valuation. The document adheres to Indonesian regulations, particularly the Indonesian Valuation Standards (SPI) and OJK regulations, while outlining the scope of work, methodology, deliverables, timeline, and professional fees. It includes specific provisions for compliance with Indonesian professional standards and incorporates local legal requirements for business valuation services.

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What is a Business Valuation Engagement Letter?

The Business Valuation Engagement Letter is a crucial document used when establishing a professional relationship for conducting business valuations in Indonesia. It serves as the foundational agreement between a valuation firm and its client, typically required for various purposes such as mergers and acquisitions, tax compliance, financial reporting, or dispute resolution. The document must comply with Indonesian law, particularly the Indonesian Valuation Standards (SPI) and relevant OJK regulations, while addressing specific requirements of the Indonesian business environment. It outlines the scope of services, methodology, deliverables, professional fees, and terms of engagement, providing clear guidelines and protections for both parties involved in the valuation process.

What sections should be included in a Business Valuation Engagement Letter?

1. Letterhead and Date: Professional firm's letterhead and date of the engagement letter

2. Client Details: Full legal name and address of the client entity

3. Engagement Purpose: Clear statement of the purpose of the business valuation engagement

4. Scope of Services: Detailed description of the valuation services to be provided, including the subject business/assets and valuation date

5. Valuation Methodology: Overview of the valuation approaches and methods to be employed

6. Professional Fees: Fee structure, payment terms, and additional costs

7. Timeline: Expected duration and key milestones of the engagement

8. Information Requirements: List of documents and information required from the client

9. Deliverables: Description of the final valuation report and any interim deliverables

10. Professional Standards: Statement of compliance with Indonesian Valuation Standards and other applicable regulations

11. Limitations and Assumptions: Key limitations and assumptions underlying the valuation

12. Confidentiality: Confidentiality obligations of both parties

13. Professional Liability: Extent and limitations of the valuer's professional liability

14. Termination: Conditions and process for terminating the engagement

15. Acceptance: Signature blocks and acceptance terms

What sections are optional to include in a Business Valuation Engagement Letter?

1. Conflict Resolution: Specific dispute resolution procedures, used when dealing with high-value engagements or at client's request

2. Third Party Access: Terms for sharing valuation results with third parties, included when the valuation may be used for external purposes

3. Special Considerations: Additional terms for unique circumstances such as cross-border elements or specialized assets

4. Team Composition: Details of key team members and their roles, included for complex engagements or when requested by client

5. Quality Review Process: Description of internal quality review procedures, included for complex or high-stakes valuations

6. Progress Reporting: Terms for interim progress updates, included for longer engagements

7. Force Majeure: Provisions for unforeseen circumstances, included based on risk assessment or client preference

What schedules should be included in a Business Valuation Engagement Letter?

1. Schedule A - Fee Structure: Detailed breakdown of professional fees, payment milestones, and expense categories

2. Schedule B - Information Requirements: Comprehensive list of required documents, data, and access requirements

3. Schedule C - Project Timeline: Detailed project schedule with key milestones and deliverable dates

4. Schedule D - Team Profile: Professional profiles of key team members and their qualifications

5. Appendix 1 - Terms and Conditions: Standard terms and conditions of the professional firm

6. Appendix 2 - Valuation Methodology: Detailed description of valuation approaches and methods to be used

7. Appendix 3 - Compliance Statement: Detailed statement of compliance with relevant Indonesian regulations and professional standards

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Cost

Free to use

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