When hiring a valuation expert to opine to the value of your business don’t be shy about looking into the valuators qualifications and background. While there is no substitute for experience, education is essential.
Make sure that the business valuation professional you hire holds at least one of the following designations:
Accredited Senior Appraiser (ASA) – The ASA is one the most respected and most difficult business valuation designations to obtain. It is administered and regulated by the American Society of Appraisers and requires five (5) years of full-time-equivalent business valuation experience as well as the successful completion of a number of ASA administered courses (and subsequent course examinations) on business valuation theory and the Uniform Standards of Professional Appraisal Practice (USPAP). In addition, designation candidates are required to submit examples of their work to the American Society of Appraisers for panel review and qualification before the designation of ASA is granted.
Certified Business Appraiser (CBA) – The CBA is another one of the most respected business valuation designations available through the Institute of Business Appraisers to qualified professionals. The CBA requires candidates to hold a 4 year college degree (or 10,000 hours of active appraisal experience), successfully complete a number of Institute of Business Appraisal courses and a six hour comprehensive exam covering the theory and practice of business appraisal. In addition, designation candidates are required to submit two examples of their work to the Institute of Business Appraisers for review by the Institute’s qualification committee before being granted the Institute’s designation.
Accredited in Business Valuation (ABV) – The ABV is administered by the American Institute of Certified Public Accountants (AICPA) and requires that all candidates hold a valid and unrevoked Certified Public Accountant (CPA) certificate or license issued by a legally constituted state authority. In addition, candidates must provide evidence of six (6) successfully completed business valuation engagements or one hundred and fifty (150) hours of experience and competence. In addition, all designation candidates are required to successfully complete a comprehensive exam demonstrating successful mastery of the profession.
Certified Valuation Analyst (CVA) / Accredited Valuation Analyst (AVA) – Both the CVA and AVA designations are administered by the National Association of Certified Valuation Analysts (NACVA). The only distinction between the two designations is the prerequisite of a valid CPA license in order to obtain the CVA designation. The prerequisite for the AVA designation on the other hand is two years of experience in business valuations or equivalent experience. The remaining requirements include the successful completion of a 5-day study course, a proctored exam and a case study.
By selecting a valuation expert with the proper qualifying designations and credentials, your valuation reports will stand the best chance of successfully withstanding scrutiny by the IRS, a lending institution or during a legal dispute. Remember, value is a subjective opinion not a fact. Whether or not a report will withstand scrutiny depends on the credentials of the individual offering the opinion.