Can you gauge the business valuation credentials of an expert? The writer says don’t just fall for an expert’s designation as experience matters the most.
By Richard Ferguson (Ohio)
CPA, ABV, ASA, AM, CVA, AVA, CBA, MCBA
Bottom line – it means experience and training.
Is one designation better than another?
The various certification and accreditation organizations would probably say yes, but it really depends on the knowledge, training and experience of this individual valuation expert.
It is generally best if your expert has at least one of the designations, but I have never seen a court disqualify an expert due to not having one or more of these letters after their name. As I noted, it really depends on training, knowledge, experience and the individual. The entire alphabet behind your name does not make a person an expert.
The organizations and designations are:
Certified Public Accountant (CPA) – Requires specific education, passing the Uniform CPA exam, certain experience and compliance with the individual state Board of Accountancy laws and rules.
Accredited in Business Valuation (ABV) – Awarded by the American Institute of Certified Public Accountants, this credential requires holding a valid and unrevoked Certified Public Accountant (CPA) certificate, passing a comprehensive exam, and meeting requirements of 75 hours of continuing education and 150 hours of business valuation experience.
Accredited Senior Appraiser (ASA) – Awarded by the American Society of Appraisers this credential is granted to individuals having a college degree or equivalent, pass various exams on valuation theory and the Uniform Appraisal Practice (USPAP) and have a minimum of five years experience. This designation is considered one of the most prestigious and hardest to receive.
Accredited Member (AM) – Awarded by the American Society of Appraisers as the first level of accreditation. Requirements include having a college degree or equivalent, pass various exams on valuation theory and the Uniform Appraisal Practice (USPAP). The candidate must provide two reports demonstrating proficiency in performing appraisal assignments and have two years of appraisal experience.
Certified Valuation Analyst (CVA) – Awarded by The National Association of Certified Valuation Analysts (NACVA), this certification is to CPAs (Certified Public Accountants) after completing course work, passing an exam and providing proficiency through a case study or submission of a client report.
Accredited Valuation Analyst (AVA) – Awarded by the National Association of Certified Valuation Analysts (NACVA) to college graduates, non-CPAs meeting all requirements of the CVA noted above.
Certified Business Appraiser (CBA) – Awarded by the Institute of Business Appraisers, Inc. to members who possess a 4-year college degree or equivalent, complete training courses, written exam and submit two demonstration reports. Anyone holding any other certification (ABV, ASA, CVA, AVA) is exempt from this exam and required courses.
Master Certified Business Appraiser (MCBA) – Awarded by the Institute of Business Appraisers, Inc. to CBAs (Certified Business Appraisers) having a 4-year college degree and a 2-year post-graduate degree or equivalent, CBA for at least 10 years and 15 years full-time experience as a business appraiser.
It is clear that all of the organizations stress training and experience to award the various designations or accreditations. However, it is the expert who must analyze the data, research the industry, review the comparable transactions and place a value on the business.
The alphabet does not ensure the outcome by your expert. It does give you an indication of the level of knowledge and exposure to business valuations your expert has.
So how do you start? You ask questions about experience such as how many valuations have you performed? What fields? Ask what research sources do you use? Ask what cases have you testified in and what was the outcome? What is new in Business Valuation Methodology? Ask about any current court cases that support your valuation.
You will know more about your expert as you listen. Listening will bring you beyond the alphabet and to the experience, training and knowledge of the expert you use.
Richard Ferguson CPA/ABV, ASA, CVA, Ferguson Consulting, LLC, 50 West Broad St., Suite 1321, Columbus, Ohio 43215.