You owe it to yourself and your clients to obtain the Accredited in Business Valuation (ABV) credential issued by the American Institute of Certified Public Accountants. The ABV credential has been in existence for seventeen years, and is widely recognized by users of valuation services as designating CPAs who have expertise and experience in performing financial valuations of a business, ownership interest, security or intangible assets.
With more than 412,000 members in 144 countries, the AICPA is the world’s largest member association representing the accounting profession. In 1998, the AICPA issued the ABV credential, and today there are over 3,200 CPA/ABVs.
It all started with a key group of visionary individuals who began down the ABV path of specialization in the 1980’s. Terry Korn, a CPA and expert in business valuation, wrote a letter to the AICPA asking the Institute to consider a BV specialization. A task force was established in 1986. From the inception of the ABV idea to its current realization, a list of dedicated BV chairs and their committees led the way and contributed to the success of this esteemed credential.
The first ABV Exam was given in the fall of 1997. To help those taking the test, an ABV Exam Review Course was developed that remains popular today. The AICPA issued Statement on Standards for Valuation Services No. 1 (SSVS No. 1) in 2007 to improve the consistency and quality of valuation services provided by all AICPA members who perform valuations. If a CPA prepares a valuation, the CPA is required to follow this standard, regardless of whether he/she has the ABV designation.
The ABV credential program is designed to achieve the following objectives:
- Increase public awareness of the CPA as the preferred business valuation professional
- Increase exposure for CPAs who have attained the ABV credential
- Enhance the quality of valuation services that members provide
- Ensure the continued competitiveness of CPAs versus other valuation services providers through continuous access to a comprehensive community of resources and support
- Increase the confidence in the quality and accuracy of valuation services provided by CPA/ABV providers
Reasons to Become a CPA/ABV: Expand Your Success
The ABV credential helps you drive your career forward, highlighting your expertise in areas such as fair value reporting, mergers and acquisitions, succession planning, shareholder dispute resolution, marital dissolutions, and bankruptcy. The ABV credential also gives you added credibility with clients and within your organization.
CPAs who provide valuation services should consider obtaining the ABV because it:
- Positions credential holders as premier valuation service providers
- Enhances practitioners’ images as competent, trustworthy valuation experts
- Promotes a greater level of confidence for current and potential clients
- Demonstrates commitment to continuously improving valuation skills and expertise, resulting in increased professional competency
- Offers greater revenue opportunities
- Expands opportunities for referrals from other practitioners, strategic partners, attorneys and clients
- Opens up a community of CPA valuation professionals with similar interests and practices
- Distinguishes your practice with the powerful combination of a CPA certificate and an ABV credential
The ABV credential empowers you, your client’s trusted CPA, to help clients with (not all-inclusive):
- Selling a business
- Obtaining financing
- Planning for a merger, acquisition, or stock offering
- Developing an estate or tax plan
- Creating a success plan
- Determining the fair value of asset and liabilities
- Assisting in litigation matters
- Calculating lost profits
- Setting up Employee Stock Ownership Plans (ESOP)
Besides all the many reasons why a client may need business valuation services, a business valuation can play a key role in helping a client achieve their financial goals.
Benchmarking and Analysis Services are often added benefits that can be provided when preparing a business valuation. In addition to concluding on the fair market value of a business or ownership interest, a valuation provides an opportunity for the CPA/ABV to share insights about the client’s business and industry with the owner(s), which could lead to improved business performance. Providing insights that “bridge” between historical results and future expectations, analyzing a business by comparing its financial position, operating results and ratios to benchmark information for similar companies in the industry, and assisting with projecting future cash flows generated by the business can provide a client with insights he/she can use to plan and increase the value of their business.
A business valuation consulting assignment could involve providing a business owner with useful information about their company’s “weighted average cost of capital” and whether the mix of debt and equity is appropriate in the circumstances. In general, the interest rate on debt is typically significantly lower than the cost of equity. The cost of equity considers the rate of return on an ownership interest in a business with similar risks of ownership. Sometimes, a business owner prefers not to have any debt for a variety of reasons. Knowing their company’s overall cost of capital and comparing it to that for similar-size businesses and/or public companies in the industry can provide information the owner may find useful in deciding whether to have the business take on more debt or raise additional equity.
Demand for Valuation Services Expanding
With a significant population of aging “baby boomers” and increases in the number of privately owned businesses, the pool of potential users of valuation services is expanding. Business owners will eventually either be selling their business or transitioning it to other family members or management. They will need valuation services to ensure they obtain the highest value for their business upon its sale, or for determining the fair market value of ownership interests gifted to family members if that is their goal.
Clients are requesting more services from CPAs; particularly services that are focused on the future and share your client’s desire to increase the value of his/her business. CPAs can expand their horizons and expand their business by providing valuation services for clients.
How to Become Accredited in Business Valuation
To earn the ABV credential, a candidate must hold a valid and unrevoked CPA license or certificate issued by a legally constituted state authority and pass the ABV Examination. The ABV Exam is a two-part modular exam given at various locations throughout the United States and Canada. The requirement to pass the ABV Exam is waived for Accredited Members (AM) and Accredited Senior Appraisers (ASA) of the American Society of Appraisers.
Upon successfully completing the ABV Exam, the candidate can complete the ABV Credential application online. Applicants must attest to meeting the Business Experience and Education requirements and pay the credential fee.
- For Business Experience, the candidate must have completed a minimum of either (1) six business valuation engagements or (2) obtained 150 hours of business valuation experience within the 5-year period preceding the date of the credential application.
- Regarding the Education requirement, the ABV candidate must have completed 75 hours of valuation-related continuing professional education (CPE). All hours must be obtained within the 5-year period preceding the date of the credential application.
Lastly, the candidate must sign a Declaration of Intent to comply with the requirements of the ABV Recertification. Information about ABV credential requirements, from which this information was summarized, can be found at the AICPA’s website.
So What Are You Waiting For?
The AICPA is known throughout the world as a quality, high level organization that aims to serve the public. The ABV credential, backed by the strength of the AICPA, shows the world that CPAs are uniquely qualified to handle financial valuations. Why has the ABV credential been so successful? – Because the ABV credential provides YOU, as the holder of the ABV credential, a means to be more successful in your career as a CPA! Are you ready to distinguish yourself? Become a CPA/ABV and position yourself as a premier valuation service provider. The rewards of doing so will benefit both you and your clients.
If you have questions about becoming a CPA/ABV, please contact the ABV Champion for your state. You can find a list and contact information at the AICPA’s website.
Susan M. Saidens, CPA/ABV, ASA, CVA, CFE, CFF has been an ABV since 2005. Her firm, SMS Valuation & Financial Forensics, is located in Exton, Pennsylvania. Susan focuses her valuation practice in the areas of mergers and acquisitions, fair value for financial reporting, gift and estate, and shareholder disputes.
Kevin M. Sullivan, CPA/ABV has been an ABV since 2002, at Sullivan, Ltd in Saint Paul, Minnesota. He practices primarily in the areas of gift and estate, shareholder transition, mergers and acquisitions and business improvement.