Criteria for Finding the Right Business Valuation Expert
To know the worth of your business and assets you need a proper business valuation. This task includes a complex financial analysis that requires to be performed by a qualified professional. Thus, to find out an accurate valuation for the company you need an experienced business valuation expert.
The critical part is to identify an expert who should hold some qualifications and characteristics that meets your expectations.
Regardless of how you choose the business valuation expert, make sure they match your needs and business assignments.
Here’s an overview of common criteria for finding the right business valuation:
Registered Valuer (RV): Valuation profession in India is regulated by IBBI and there are 3 categories of Valuers:
a) Securities & Financial Assets
b) Land & Building
c) Plant & Machinery
One should approach a Registered Valuer under Securities & Financial Asset Category to get the opinion on value of their business.
ASA – Accredited Senior Appraiser: The American Society of Appraisers is a widely recognized organization committed to business valuation.ASA accreditation is for practitioners interested in businesses for being professional credentials.
It requires completion of five years of full-time appraisal experience as well as a college degree. Completion of 123 hours of education with the passing of written and oral examinations is a must. Also, it is necessary to pass an ethics test and submit the evidence of education and professional growth. To maintain the designation of ASA you have to complete the additional courses.
CFA – Chartered Financial Analyst: CFA Institute and AIMR (Association for Investment Management and Research) provide education and advocacy programs for its professionals. CFA program is mainly oriented towards investment and portfolio management.
The designation includes three-six hours of written examination with the four years of full-time industry experience in the investment decision-making process. The work knowledge under this field involves ethical and professional methods in financial statement analysis, fixed income investment, global market valuation, and investment theory.
CVA– Certified Valuation Analyst: NACVA (National Association of Certified Valuators and Analysts) provides business valuation services and CVA credential.
CVA designation includes a five-day training program with the four hours proctored exam plus a take-home test.Experts are required to have a valid CPA or relevant business degree. Those who are not CPA holders can have the AVA (Accredited Valuation Analyst) designation as the designation is merged with CVA.
CPA– Certified Public Accountant / ABV – Accredited in Business Valuation: American Institute of Certified Public Accountants provide the ABV designation. The experts come with the knowledge of various disciplines which includes an understanding of accounting, tax issues, financial statement related matters, and business management.
It requires the professional to complete 75 hours of valuation-related continuing professional development (CPD) within the 5 years preceding the date of the credential application.AICPA’s reaccreditation cycle requires CPA/ABVs to complete continuing professional education with evidence of continued involvement in the discipline.
Other than the certifications there are some questions that you should ask before hiring a business valuation expert:
- Ask for their credentials and it must be one of the best accreditation program designations i.eRegistered Valuer (RV), ASA (Accredited Senior Appraiser), ABV (Accredited in Business Valuation), CVA (Certified Valuation Analyst), or CFA (Chartered Financial Analyst) or other College Accreditations..
- Ask if they have depth knowledge of different types of business or only experienced in valuing a single business type?
- Ask how many years they have been doing business valuations and for which industries they have performed the same?
- Ask for a copy of the sample report plus the copy of the annual report for the continuing professional education.
It necessary to determine their level of experience when hiring someone. As the property and financial transactions are a crucial part of any business with a lot of complex terminologies that can be best understood by a professional evaluator. They are responsible to find economic value for your business so always make sure you hire a world-class business valuation expert.