How ABV credential holders can create opportunities from challenges

May 11, 2020

While the public health crisis brings extraordinary market conditions, Accredited in Business Valuation (ABV) credential holders are well-positioned to assist clients during these unprecedented times. Though privately-held business valuations do not strictly follow the public markets, values may be depressed as a result of decreased cash flows, higher risk or lower marketability caused in part by voluntary social distancing and government-imposed closures, stay-at-home orders, etc. Alternatively, businesses in some industries may see an increase in value due to changes in market demand and consumer habits.

The good news is these challenges present opportunities for ABV credential holders to better serve their clients during these extraordinary times. Uncertain of where to turn, clients may be looking for assistance in the following valuation service areas:

Advisory Services

  • Selling their businesses due to market changes
  • Acquiring other businesses due to advantaged entry points or perceived strategic benefits
  • Identifying ways to rebuild business value
  • Planning for cash flows and scenario analysis

Fair Value

  • Testing goodwill, indefinite-lived and long-lived assets for impairment
  • Determining the fair value of their investments

Employee Stock Ownership Plans

  • Exploring whether to utilize the interim valuation date option for ESOPs

Dispute/Litigation

  • Computing economic damages to business value and assisting with litigation or insurance claims
  • Navigating the complexities related to bankruptcy and restructuring
  • Valuing assets for equitable distribution purposes

Tax

  • Making gifts of stock/membership interests while values are depressed
  • Seeking advice on other estate planning issues including the use of alternative valuation dates

Though the list above is not intended to be all-inclusive, it does present examples of how ABV credential holders are helping their clients, and themselves, during the current pandemic. As the fallout from the current health crisis becomes more apparent, the challenges businesses are currently facing will create opportunities for ABV credential holders to enhance their image as competent, credible and experienced valuation service providers. 

For additional resources on these topics, please visit the AICPA FVS Section COVID-19 resource page at: www.aicpa.org/covid19fvs.