Solid advice on BV career development
A common thread that wove its way through last week’s ASA conference on appraisal career development was the advice to specialize. Speakers in all of the sessions at the 2023 Beyond Valuation—Professional Development and Growth Conference urged attendees to specialize in some area of appraisal—whether it be an industry, type, or purpose of a valuation. The June 8 event was hosted by the American Society of Appraisers (ASA) and sponsored by Empire Valuation Consultants.
Natural progression: As a profession grows larger and more complex, practitioners move toward specialization to survive and grow. Good examples are the law, medical, and technology professions. While the BV profession has recognized the trend to specialize, it appears that many valuers are still in the generalist category. During a 2021 BVR webinar, the audience was asked: Do you specialize within a particular industry? Three-quarters of respondents said that they are generalists and have little or no industry specialization. Unless there has been some seismic shift, the profession still has a good share of generalists.
The conference covered many more of the soft skills young valuation professionals need to take their careers to the next level. Of course, managers also need to be aware of these skills to develop their staff. Full coverage of the event—including advice on how to specialize—will be in the July issue of Business Valuation Update.
Hitchner comments on new Pepperdine report
The 2023 Private Capital Markets Report has a “plethora of good information,” says Jim Hitchner (Financial Valuation Advisors) in the May issue of Hardball With Hitchner. The report, from Pepperdine University, is the latest edition based on an annual survey of expected rates of return with respect to private companies. Respondents include lenders, private equity, venture capital firms, private-company owners, business brokers, business appraisers, and more. According to very early results in BVR’s Benchmarking Survey, 27% of respondents say they use the report for estimating small private-company cost of capital.
His caveat:While Hitchner goes into detail about the “positive pointers” of the report, he cautions users that some of the sample sizes are small and the sizes of the businesses also tend to be small. He advises analysts not to use the report as their sole valuation method.
Last year, the project needed to charge a fee for the report, but this year it is free (thanks to a new sponsor). To get a copy of the current and all prior reports, click here.
Faulty information slices personal goodwill in two
In a Utah divorce case, both the joint valuation expert and the expert the husband engaged agreed to the amount of personal goodwill in the husband’s consulting business. In Utah, personal goodwill is not subject to distribution in divorce.
Bad data:The estimate was based on an understanding of how the company acquired contracts. But, at trial, it was determined that the husband provided faulty information about this, and the court reduced the amount of personal goodwill by half. The husband appealed, but the appellate court affirmed.
There were other valuation issues, including the choice of valuation date and built-in capital gains taxes. The case is Rothwell v. Rothwell, 2023 UT App 50; 2023 Utah App. LEXIS 51; 2023 WL 3360879, and a case analysis and full court opinion are on the BVLaw platform.
New AICPA event on portfolio valuations
On June 28, the AICPA will debut the first in what will be a recurring event: the Portfolio Valuation Forum. This will be an in-person event (at KPMG in New York City) and via Zoom from 4:30 p.m. to 6:15 p.m. EDT. This is designed as an educational and networking event that brings together industry experts and participants in an interactive forum where participants can have real-time discussions on portfolio valuation-related topics, trends, and issues. Confirmed presenters include:
The moderator will be Sumeet Bhatnagar of KPMG.
BVWire will be there—will you? For details and to register, click here.
Deadline looms for BVR’s benchmarking effort
June 30 is the deadline to participate in BVR’s 15-year effort to help understand what makes a good BV practice a great one. If you have not already done so, please take the BVR Benchmarking Survey that collects data on operations, financial metrics, compensation, staffing, marketing, billing, tools and resources used, and more. The direct link to the survey is bvresources.com/2023bvsurvey. Our thanks to those of you who have already participated!
Global BV News
Calculation reports are very popular in Canada
BVWire attended last week’s CBV Connect conference, and one session discussed the three levels of valuation reports Canadian valuation standards identified: comprehensive, estimate, and calculation. The calculation report is the lowest level and is based on minimal review and analysis and little or no corroboration of information given by management. According to practice inspection declarations for 2022, more calculation reports were issued from 2018 to 2021 than the other types. There were 633 calculation reports issued and 547 estimate valuation reports (the midlevel report)—only 158 comprehensive valuation reports were issued in that time frame. What’s more, more than half (60%) of conference attendees said they would most likely not use a comprehensive report for litigation purposes. Full coverage of the conference will be in the August issue of Business Valuation Update.
Free webinar series from the IVSC and Kroll continues through June 15
Kroll is sponsoring a series of webinars presented by the International Valuation Standards Council (IVSC), and the last one will be tomorrow, June 15 (past recordings available). The 2023 Valuation Webinar Series consists of four panel discussions from leading international experts on topics such as the global economic outlook, ESG, sovereign wealth funds, consistency and transparency issues, and more.
Speakers include Alistair Darling, IVSC chair and former UK Chancellor of the Exchequer; Megan Greene, Kroll chief economist and Bank of England Monetary Policy Committee (MPC) member; Mary Barth, professor of accounting, emerita at Stanford University; Marcelo Barbosa, former president of the Brazilian SEC; Doug McPhee, senior director and head of valuations for the Saudi Public Investment Fund; Louis Kujis, chief Asia economist, S&P Global Ratings; and Carla Nunes, MD, Office of Professional Practice, Kroll. For details and to register, click here (you can also view past webinars).
The International Association of Certified Valuation Specialists