Month: May 2022

If you are in need of a business valuation, whether to settle an estate or divorce or for a business or shareholder dispute, criteria for selecting the business valuation professional need not consider geography. Similar to a recent blog regarding industry specialization, neither industry or geography matter.

As a certified business appraiser, I have prepared business valuations for privately held businesses throughout the United States; from Maine to Hawaii and North Dakota to Texas. Internationally, I have developed business valuations for businesses in more than fifteen different countries.

Through decades of experience and by leveraging technology, business valuations can be thoroughly and completely prepared remotely. I can and do conduct business as efficiently and effectively with a business owner in Andover, MA as I do working with a business owner in Houston, Texas. Documents are easily and safely shared electronically and for businesses where site visits are relevant, I have and continue to successfully conduct site visits remotely. During the pandemic, site visits were not possible as businesses were shut down or access was limited for the safety of the employees. In such cases and for businesses not located nearby, I have successfully completed ‘site visits’, including for a scuba diving business in Hawaii, gathering the important data needed to finalize the business valuation.

Instead of limiting your search to a professional who is close to you geographically or who has prepared business valuations in your industry sector, I encourage you to focus your evaluation of a business valuation professional on the following 3 most important criteria:

1. Credentials. Are they certified? Do they have the credentials to demonstrate their understanding of business valuation? One way to assess this could be asking the professional if this is their full-time focus. That can be an indicator that the professional has dedicated his or her career to remaining current on tax laws and business valuations are their sole focus. Ask the professional for their credentials specific to business valuation, and specifically look for the following certifications: CBA, ASA and/or CVA. Note: CPA is not sufficient.
2. Track record. Does the business valuation professional have a proven track record demonstrating their business valuations stand up to rigorous scrutiny? They should be able to clearly speak to the track record of testifying in court as one example and what the results were.
3. Proven process. Does the business valuation professional offer a proven process and methodology that is consistently applied regardless of the business or industry? Process is important as it is the process that converts to the final deliverable. When an ‘industry professional’ presents to the trier of fact a 1 page business valuation report and the trier of fact compares that to our 100+ page business valuation report documenting what was done, why it was done, how it was done, conclusions drawn and why those conclusions are reasonable and credible, there is no comparison.

For a recent interesting case study on valuing mineral rights on property in North Dakota, click here.

When Values Matter. Geography Does Not.

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It was great to be at the 2022 International Business Brokers Association (IBBA) Annual Conference in Denver, Colorado earlier this month. It was the first conference I had been to since the pandemic started and the attendance was the largest ever for the conference with over 700 attendees!

So, while gas prices and inflation rise and the war in Ukraine continues, the IBBA conference brought a sense of normalcy with so many business brokers and M&A professionals networking, learning and sharing insights and observations on the market and the industry.

As a member of the IBBA Board of Governors and the Education Committee, I see first hand how much time and effort goes into planning such a conference. The Executive Director and her team did a wonderful job to plan and execute a high quality, high energy event.

At the event, I was honored to be one of two recipients of the 2022 Fellow of the IBBA lifetime award for professionalism, achievement, and service. It has been an honor to be part of this organization.

With Spring’s arrival here in New England, I look forward to more signs of normalcy.

Business valuations can have a significant impact in the outcome of important matters in one’s professional and personal life. Important matters requiring an opinion of value may include the division of assets for a divorce settlement, shareholder dispute, gifting shares, or settling an estate. From taxes to settling a shareholder dispute, a business valuation can factor significantly in the outcome of the matter at hand.

When it comes to such matters, it makes sense to make an informed decision when choosing the right professional to prepare the business valuation. If you or a friend needed a medical opinion, you would likely seek out a professional who had the experience and credentials that are applicable to the specific medical condition. It would not make sense to seek the advice of a dentist for a foot condition, even though the dentist has a medical degree.

When seeking tax advice, most would turn to their CPA. But does turning to a CPA to develop a business valuation make sense? The accounting and business valuation professions are two different disciplines. In fact, the American Institute of Certified Public Accountants (AICPA) recognizes this and offers additional training and accreditation in business valuation for those accountants who want to prepare business valuations.

Business valuation professionals are governed and certified by separate organizations as the discipline of business valuation has its own set of rigor and standards. As the IRS indicates, a “qualified appraiser” is an individual who has earned an appraisal designation from a recognized professional appraiser organization; for business valuation the designations that meet the requirements of a qualified appraiser include CBI, CBA, ASA, CVA, or ABV. A qualified appraiser does not include the designation of CPA. Lou Pereira has earned four of these designations including being a Certified Business Appraiser (CBA), from the Institute of Business Appraisers (IBA) of which there are fewer than 12 in New England and fewer than 200 across the United States.

Choosing a professional to prepare and present a business valuation is an important decision. It is advised that you do your research as the result can be significant in terms of the awarded dollar value whether from arbitration, settlement, or a court ruling. Read how values matter in a divorce case when separate valuations were prepared by a credentialed business appraiser and a CPA. Read how the settlement of an estate was affected when a CPA was hired by one party to prepare the valuation and how that fared against the valuation prepared by a Certified Business Appraiser.

When Values Matter, Credentials Matter, too. Do your homework and get the right credentialed professional preparing the business valuation.

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