Verify an Entity

Always required: a current balance sheet for the entity, with a signed affidavit stating that all assets and liabilities are disclosed.

Plus at least one of the following:

• An asset purchase agreement from the last 12 months, between non-related parties
• Documentation of a recent equity raise
• A third-party buy-in or buy-out
• A recent independent appraisal (typically an ASA, ABV, CVA, or CFA valuation report)

Where applicable:

• Any real estate counted toward value: an appraisal or a realtor's CMA — signed, with their license number — plus loan payoff statements for any mortgages
• A credit report from the last 30 days

Don't have third-party documentation? Your CPA can discuss alternative procedures, such as a valuation based on a multiple of Seller's Discretionary Earnings (SDE) or EBITDA — quoted case by case once your documents are in.

All five are required:

• The ownership or partnership agreement
• The most recent Schedule K-1
• A current balance sheet, with a signed affidavit that all assets and liabilities are disclosed
• The most recent statement or payoff for every debt shown on that balance sheet
• A client representation letter attesting that there have been no material changes in financial condition and no material information has been omitted

• Organizing documents showing the entity was established as a family office
• A recent balance sheet or custodial statement demonstrating $5,000,000 or more in assets under management
• An affidavit stating the entity was not formed for the specific purpose of acquiring the investment this letter will cover
• A representation identifying the individual responsible for making investment decisions

Family clients of a qualifying office only: confirmation that the investor is a family client under the Family Office Rule (SEC Rule 501(a)(13)), and that the qualifying family office directs the investment.

"Institution" covers many structures, so documentation is case by case. At a minimum, your CPA will need:

• Organizing documents
• A current balance sheet, with a signed affidavit that all assets and liabilities are disclosed
• Custodial statements

An independent valuation can substitute for some of the above. Expect your CPA to request additional documentation depending on the structure.