News & Insights
What to Look for in a Valuation Expert and Firm
July 31st, 2020
By Jeff Allen |
Succession Planning |
In the world of business valuations, an exceptional valuator can be difficult to find. Prospective buyers and sellers often ask themselves several questions such as: Do they know my industry? Do they really understand my unique situation? Can their firm help me through the entire process? These questions can easily be answered by the best valuators and firms in the industry.
When looking for an exceptional valuator and firm there are four critical items to take into consideration:
- Valuator expertise: It goes without saying that the business valuator you select to assist in your possible transaction should be an expert. Look for a valuator that has several years of experience in not just conducting a business valuation, but also in areas such as auditing, tax, improvement consulting, operations, logistics, etc. A professional that expands their expertise into business valuation without a well-rounded background may not have the complete aptitude to conduct the valuation in the most comprehensive way. On the other hand, a valuator that has worked in the industry, lived through a business sale/purchase and has lived life in multiple positions and places can add a depth of understanding that few others can match.
- Valuator credentialing: Like attorneys, physicians and other professionals, accreditation in a field of expertise sets the real experts apart from others. When selecting a business valuator, you should always look for a professional that has passed a rigorous valuation exam, attended extensive training (and continues to do so on a regular basis) and has conducted an ample number of valuation-related projects to become credentialed. Selecting an accredited expert means he/she has met the high bar of excellence in valuation, offering you peace of mind knowing your valuation is in good hands. Some credentialing organizations offer various designations but look for one of the major designations such as ABV (Accredited in Business Valuation) or CVA (Certified Valuation Analyst).
- Additional firm capabilities: Often, when selecting a business valuation expert, a client only thinks about one thing … the actual valuation. However, while the expert selected should be a real expert (see above), the firm the valuator is partnered with should also be evaluated. An excellent valuator will often be partnered with a full-service firm that can assist in multiple pieces of the buy or sell transaction. Other types of firm services could include ongoing accounting assistance, outsources CFO/controller services, complex gift and estate tax calculations/filing and wealth management to name a few. A firm that can bring all aspects of the business under one roof offers the potential for streamlined and highly-efficient expertise for both a buyer getting into a business or a seller looking to cash out.
- Willingness to understand your personal situation: Far too often a prospective buyer or seller calls a valuation firm looking to see what they charge for a valuation. They are typically quoted a price that is shocking. The prospective buyer or seller then concludes the price is too high and does not end up seeking adequate counsel. This is very unfortunate. In many cases, firms receive a call from a prospective buyer or seller and don’t take the time to listen to the actual matter. A good valuator will take time to understand the purpose of the transaction, the parties involved and the depth of what’s required. Many prospective buyers and sellers would be thrilled to know that less expensive alternative may be available based on their circumstances. A good valuator will get to the bottom of things before quickly recommending the most expensive option.
If an exceptional business valuation expert and firm sounds like something you’re looking for, it may be time to reach out to the professionals at Maner Costerisan.