What to Look for in Your Business Valuator
Business valuation is a tough multi-disciplinary profession. It requires coordination, specialization, judgment, wisdom and perspective in several financial disciplines to bring together a competent, coherent and credible valuation report. Ensure your valuator has substantial qualifications in the following specialties, skills and mindset before you invest in their services:
- Modern valuation theory and methodologies through live classroom training by competent national training organizations
- Experience and training in accounting and income taxes to analyze, interpret and adjust historical financial statements and income tax returns
- Economics and the relationship between the local, regional, state, national and international implications bearing on the risk assessment of the subject company
- Research methods and techniques, especially on the internet
- Statistics and mathematics to determine appropriate calculations and measures of uncertainty and sensitivity analysis
- Analytical skills to determine the key variables which drive value and risk in the specific subject company
- Sufficient years of experience in a broad range of industries to be able to sense and evaluate how the subject company actually works; what strengths, weaknesses, opportunities and threats bear on the value and associated risk of the subject company
- Technical writing skills sufficient to convey complex ideas in simple terms
- Modern computer skills, especially in spreadsheets and graphics
Make sure your valuator has specialized training and current continuing education by quality national valuation education providers before you invest your funds and expectations in an expensive venture.
Faking It With Irrelevant “Filler” in Resumes
Do not be fooled by pages of irrelevant “fill” data in qualification statements. Insist on seeing the substance of the technical expertise in qualified valuation professionals who have invested their time and capital in earning national accreditation and required to adhere to professional standards and continuing education requirements.
Many broadly publicized resumes several pages long for senior executive of nationally-advertised firms on the internet did not contain any relevant education, training, credentials or other qualifications for performing a business valuation, other than having done thousands of valuations over several years… presumably, all similarly incorrect, substandard or not in conformity with any professional standards set forth by national credentialing organizations.
Business Valuation Is a Profession With Documented Generally Accepted Appraisal Practices, Methodology and Professional Standards
The valuation work performed by CPAs and attorneys who have no valuation qualifications are being rejected by the courts and the cases are lost when the judge excludes the evidence provided by such quasi “experts.”
Similarly, a general background in venture capital, mergers and acquisitions, business brokerage or investment banking, and the like, no matter for how long, no matter how many articles written and speeches given, do not substitute for the specialized business valuation theory, methodology, training, knowledge and judgment required to prepare a credible and soundly-reasoned valuation conclusion.