What To Look For In A Valuation Expert


Business valuation is a process applied by qualified valuation experts to determine the fair market value of an owner’s interest in a business. A significant amount of training and experience is necessary across several disciplines:

  • Business strategy and management
  • Finance, Economics and Accounting
  • Legal

Because of the potential financial and legal implications that drive the need for a business valuation, you should identify the criteria you are going to use to select a valuation expert.


Experience
Significant and diverse business valuation experience help develop the knowledge necessary to attain technical proficiency and the judgment to apply that knowledge appropriately.

Significant

  Experience is developed through execution over time. A business valuation expert with 20 or 30 years of experience is likely to have seen more relevant situations that can be applied to your project.


Relevant

  Experience providing business valuation for the same type of business as your own improves the ability of the valuation expert to make an accurate assessment of your business.


Proven

  Nothing demonstrates business valuation knowledge like providing expert witness testimony in a court of law. A business valuation expert who actively engages in court testimony has to prove the scientific methods used to determine the value of a business.

Professional Credentials
Buyers of business valuation consulting need to exercise the same prudence they would use to select other professional expert service such as attorneys or doctors. There is no law that prohibits anyone from offering business valuation services. However, there are three primary certifications that identify an experienced and proficient business valuation expert.


State Certified Public Accountant
The CPA requirements, which are set by each state board of accountancy, include completing a program of study in accounting at a college or university, passing the Uniform CPA Exam and obtaining a specific amount of professional work experience in public accounting.


The Texas State Board of Public Accountancy in cooperation with the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA) conducts the Uniform CPA Examination comprised of four sections.

  • Auditing & Attestation
  • Business Environment & Concepts
  • Financial Accounting & Reporting
  • Regulation

American Institute of Certified Public Accountants
Founded in 1887, the American Institute of Certified Public Accountants (AICPA) is the national professional organization for Certified Public Accountants (CPAs) in the United States.  The AICPA’s mission is to provide members with the resources, information and leadership that enable them to provide valuable services in the highest professional manner to benefit the public, employers and clients.  In fulfilling its mission, the AICPA works with state CPA organizations and gives priority to those areas where public reliance on CPA skills is most significant.
By engaging in activities to achieve this mission, the AICPA develops standards for audit and other services provided by CPAs, provides educational guidance materials to its members, creates and grades the Uniform CPA Exam, and monitors and enforces compliance with the profession’s audit, technical and ethical standards. ABV Certification Requirements


National Association of Certified Valuation Analysts
The National Association of Certified Valuation Analysts supports the users of business and intangible asset valuation services and financial forensic services, including damages determinations of all kinds and fraud detection and prevention. NACVA’s credentials, like their training, are respected worldwide because of the high standards they have established for both applicants and designees.  Once designated, a CVA must recertify every three years.  NACVA is the only association in our discipline that has in place defined programs for recertifying designees that emphasize the importance of both being “current” with industry developments and the components of “quality” in one’s work product.  CVA Certification Requirements


Misleading Credentials
Some business valuation consultants may attempt to confuse buyers with credentials that do meet the same rigorous requirements as the CPA, CVA or ABV certifications. For example, The Institute of Business Appraisers offers a Certified Business Appraiser Accreditation (CBA). However, CBA will accept “10,000 hours of business valuation” in lieu of a 4-year college degree. If a CBA candidate does not have the required hours of experience, they must have a 4-year college degree – BUT ACCOUNTING IS NOT REQUIRED. The American Society of Appraisers offers their ASA Designated Appraiser certification. Like the CBA, no 4-year college degree is required. Candidates only need to score above 75% on their ASA exam to be certified. This certification is excellent for antique appraisers – but not to value the tangible and intangible assets of your business.

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