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Business valuation is a complex and evolving
field. It includes elements of finance, accounting, law, economics,
management and other disciplines. Because business valuations
usually give rise to significant financial and legal implications,
a certain level of care must be exercised in choosing a qualified
valuation advisor. Consider the following:
Experience
You should seek a valuation advisor
that has a significant level of experience conducting business
appraisals. Not only does experience help develop the knowledge
necessary to attain technical proficiency, it also cultivates
the judgment that is a critical component of a good business
valuation. As a reference point, the business valuation field's
two premier professional associations expect the equivalent
of five years of experience in order for an individual to
be eligible to receive their premier business valuation credentials.
The valuation advisor's tenure in the
business appraisal field is only one aspect to consider. The
depth and breadth of that experience can also be important.
Does this person have experience in valuing businesses in
your industry? Does this person have experience in providing
a valuation for this purpose (i.e. for a divorce or for an
estate tax return)? Has this person's training come entirely
from an internal source, or have they benefited from the perspectives
of leaders in the business valuation discipline?
Increasingly, the courts and other authorities
demand an experienced, credentialed valuation advisor. Often,
this means soliciting the expertise of a person who devotes
substantially all of their professional efforts toward providing
business valuation services.
Professional Credentials
Unlike many other professions, people
holding themselves out as business valuation "experts"
may or may not have even a minimal level of competency. No
college major exists in the discipline, nor are there any
state or federal licensing requirements. However, several
organizations offer professional certifications for business
valuation advisors.
These include:
Institute of Business Appraisers - The
I.B.A.'s principal accreditation is the Certified Business
Appraiser (CBA). To attain this credential, applicants must
meet certain educational requirements and pass an exam. Additionally,
applicants must demonstrate 10,000 hours of business valuation
experience or 90 hours of advanced course work. Most importantly,
applicants must undergo a demanding peer review process, where
a committee of leading valuation practitioners evaluates the
applicant's competence through a review of two "demonstration
reports".
Find out more about the CBA
designation
American Society of Appraisers - The
A.S.A.'s premier business valuation designation is the Accredited
Senior Appraiser (ASA). Earning the ASA designation requires
meeting certain educational requirements, passage of an exam,
and five years of business valuation experience. Like the
CBA, it also requires the applicant to submit their work product
to a group of leading practitioners who put it through an
exacting peer review.
Find out more about the ASA
designation
American Institute of Certified Public
Accountants - the AICPA grants the Accredited in Business
Valuation (ABV) designation only to CPAs who have completed
course work, passed an exam and demonstrated "significant
experience" in the field (defined as involvement in ten
business valuation engagements).
Find out more about the ABV
designation
National Association of Certified Valuation
Analysts - NACVA offers the Certified Valuation Analyst (CVA)
credential, which requires a CPA designation, attendance at
a five-day training course, and passage of an exam.
Find out more about the CVA
designation
If you need a business valuation, ask
about (and verify) the expert's professional designations.
And remember that the degree of difficulty involved in attaining
these credentials varies.
Other things to consider…
• Membership in one or more
professional societies dedicated to business valuation indicates
a commitment to the field.
• Continuing education not only provides information
on developing trends and issues, but it promotes
interaction with leading professionals and shows a dedication
to professional improvement.
• Publication of articles on business valuation topics
suggests a certain level of credibility.
• Adherence to a set of professional standards and/or
code of ethics is a minimum requirement for a
credible valuation
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