Attaining the Accredited in Business Valuation (ABV) credential granted exclusively by the American Institute of Certified Public Accountants (AICPA) will help expand your professional capabilities and enhance the types of services you are qualified to provide your clients.
The ABV credential is widely recognized by users of valuation services as designating individuals who have expertise, experience and credibility in performing financial valuations of a business, ownership interest, security and intangible assets.
Recently, the AICPA expanded the ABV certification to include both certified public accountants (CPAs) and qualified valuation professionals other than CPAs who meet the AICPA’s rigorous criteria to become credentialed as a business valuation professional. By providing the ABV credential to those valuation professionals who do not have a CPA credential, the AICPA recognizes that qualified business valuation professionals can come from a variety of professional fields and backgrounds. The expansion of the ABV credential acknowledges the fact that valuation services are provided by a broad range of valuation professionals.
The ABV credential
The ABV credential program is designed to achieve the following objectives:
- Increase public awareness of an ABV credentialed professional as the premier business valuation professional.
- Increase client confidence in the quality of the valuation services that an ABV professional can provide.
- Increase exposure for those who have attained the ABV credential.
- Enhance the quality and transparency of valuation services that an ABV can provide as compared with other valuation certifications.
Services provided by an ABV
The ABV credential empowers professionals to help clients with valuation services such as, but not limited to:
- Selling or purchasing a business.
- Obtaining financing, such as SBA loans or other financing.
- Planning for a merger, acquisition or stock offering.
- Developing an estate plan and/or determining the fair market value of an ownership interest for estate tax return filing purposes.
- Gifting or selling of ownership interests in a privately-owned business.
- Determining the fair value of asset and liabilities for financial statement purposes.
- Measuring the fair value of intangible assets for financial statement purposes.
- Assisting in litigation matters, such as with marital dissolutions or shareholder disputes.
- Preparing annual valuations for the benefit of Employee Stock Ownership Plan (ESOP) plan fiduciaries and ESOP participants.
- Providing consultation and information to business owners who desire to optimize their company’s capital structure (debt and equity) and lower the company’s overall cost of capital.
The ABV valuation professional can help their clients with “bridging” the historical results of a business with future expectations, providing an objective market analysis of a business by comparing the business’ financial position, operating results and financial ratios to benchmark information for similar companies in the industry, and by assisting with projecting future cash flows expected for the business. An ABV can therefore provide a client with insights he/she can use to plan and maximize the value of the business.
For purposes of valuations prepared for U.S. tax purposes, the Internal Revenue Service has defined those who are considered a “qualified appraiser” as an individual who has earned an appraisal designation from a recognized professional appraiser organization. Furthermore, several court cases have demonstrated the necessity for individuals who practice in a specialized area to have the necessary skills, experience and expertise to be considered a credible witness or expert. Daubert and Mandelbaum are two cases that address these areas. Attaining the ABV is a credible way for CPAs and qualified valuation professionals who are not CPAs to demonstrate achievement of the expertise needed for a variety of valuation assignments.
Why obtain the ABV credential?
The ABV credential is a professional designation that highlights your expertise in business valuation and helps to promote consistency, quality and transparency in the valuation marketplace. It opens the door to practice areas such as fair value reporting, mergers and acquisitions, succession planning, tax-related valuations, shareholder dispute resolution, marital dissolutions, bankruptcy matters and business improvement. The ABV credential gives you added credibility with clients because it requires those who hold the certification to continuously meet standards for work experience, education and lifelong learning. And, the ABV credential is backed by the support of the AICPA’s professional standards, ethics and guidance.
CPAs and valuation professionals other than CPAs should consider obtaining the ABV because it:
- Positions a credential holder as a premier valuation service provider who has achieved a level of competence and experience in the area of business valuation.
- Enhances a practitioner’s image as a credible and trustworthy valuation expert.
- Promotes a greater level of confidence for current and potential clients in the valuation services to be provided.
- Demonstrates commitment to continuously improving valuation skills and expertise, resulting in increased professional competency.
- Offers greater revenue opportunities.
- Expands opportunities for referrals from clients, referral sources, attorneys, bankers, other practitioners and strategic partners.
- Exposes the valuation professional to networking with a community of valuation professionals with similar interests and practices.
- Distinguishes your practice by having a specialty expert qualification.
How to attain the ABV credential
The AICPA has defined the following eligibility requirements for CPAs and valuation professionals:
Requirements for CPAs
- Maintain regular AICPA membership in good standing.
- Hold a valid and unrevoked CPA license or certificate issued by a legally constituted state authority.
- Pass the ABV examination. This requirement is waived for candidates who have passed the ASA credential exams of the American Society of Appraisers, CFA exam level III of the CFA Institute or CBV credential exam of the Canadian Institute of Chartered Business Valuators.
- Upon successfully passing the ABV Exam, complete the ABV Credential Application. Applicants must attest to meeting the minimum business experience and education requirements and pay the appropriate credential fee.
- Business experience — CPA candidates must have a minimum of 1,500 hours of valuation experience within the five-year period preceding the date of the credential application. Refer to the ABV Credential FAQs at www.aicpa.org.
- Education requirement — Complete 75 hours of valuation-related continuing professional education within the five-year period preceding the date of the credential application
- Sign a Declaration of Intent to comply with the requirements of ABV recertification.
Requirements for valuation professionals, other than CPAs
- Maintain an associate AICPA, non-CPA associate or CPA exam candidate affiliate AICPA membership in good standing.
- Hold a bachelor’s degree or equivalent from an accredited college or university and complete the AICPA Professional Conduct and Standards Education for Finance Professionals course.
- Pass the ABV examination. This requirement is waived for those listed in item 3 above.
- Upon successfully passing the ABV exam, complete the ABV credential application. Applicants must attest to meeting the minimum business experience and education requirements and pay the appropriate credential fee.
- Business experience — Finance professional candidates must obtain a minimum of 4,500 hours of valuation experience within the five-year period preceding the date of the credential application. Refer to the ABV Credential FAQs at www.aicpa.org.
- Education requirement — Complete 75 hours of valuation-related continuing professional development within the five-year period preceding the date of the credential application.
- Sign a Declaration of Intent to comply with the requirements of ABV recertification.
Take steps now to secure your ABV
The ABV credential, backed by the strength of the AICPA, shows the world that CPAs and valuation professionals are uniquely qualified to prepare professional business valuations. The ABV credential provides you with an avenue to be more successful in your career. If you are ready to distinguish yourself, attain the ABV and position yourself as a premier valuation services provider. The rewards of doing so will benefit both you and your clients.
If you have questions about attaining the ABV credential, refer to aicpa.org and the “ABV Credential FAQs” for further details. You may also download the ABV Credential Handbook for additional details.
Kevin Michael Sullivan, CPA/ABV, ASA, CGMA has been an ABV since 2002 at Sullivan, Ltd in Saint Paul, Minnesota. He practices primarily in the areas of shareholder succession planning, gift and estate matters, mergers and acquisitions, and dispute resolution. Kevin may be reached at firstname.lastname@example.org.
Susan M. Saidens, CPA/ABV, CEIV has been an ABV since 2005. Her firm, SMS Valuation & Financial Forensics, is just outside of Philadelphia, Pennsylvania. Susan focuses her valuation practice in the areas of mergers and acquisitions, fair value for financial reporting, valuation of intangible assets, and shareholder disputes. Susan may be reached at sms@ValuationAndForensics.com.