Why Valuation is Becoming a More Attainable and Profitable Skill
Over the past several years, especially since the advent of DIY tax prep and bookkeeping systems, many accounting professionals have sought new services to offer their clients, both as a means of adding a new revenue stream, as well as to help strengthen their client relationships.
For some firms, this has meant adding full payroll service bureau capabilities. Still, other firms have added or expanded their skills in the areas of tax and business planning, financial statement analysis, financial advising, and brokerage, and mortgage services. Yet very few professionals have turned to business valuation as a way to enhance their offerings.
Specialists only, until now
The reason? While this service has been offered by a relatively small number of professional accountants for years, it was often too labor-intensive and required a high degree of specialty. To truly succeed in this niche, CPAs typically had to make it their primary offering.
But technology has recently caught up. Software is automating many valuation tasks and making the processes much more streamlined and, therefore, more profitable. Suddenly, CPAs looking to enhance their offerings can viably consider adding this skillset. And with the demand for business valuation experts on the rise, the future of the service appears to be bright.
The value of being a valuator
Professionals with a Certified Valuation Analyst (CVA) credential from the National Association of Certified Valuation Analysts (NACVA) are frequently called on to provide their financial expertise during divorces, sales of partnerships, shareholder disputes, and bankruptcies. They also often offer support for other litigation, as well as in estate planning and gift tax compliance.
In many of these instances, especially in divorce cases, the courts and attorneys representing the parties are not often prepared for valuation matters, which often include family-run businesses and partnerships. Valuation professionals provide neutral expert testimony, either on behalf of one of the clients or even on behalf of the court in some bankruptcy matters.
Increasingly, both parties in divorces are jointly hiring a valuation professional to assess the value of a business. Knowing the real market value of an entity is also essential when preparing for its sale or when seeking financing.
Technology the new norm
In addition to their professional expertise, these valuation experts also often rely on software programs explicitly built to determine the value of a business entity. The major systems on the market include DealSense Plus+ and Corporate Valuation Professional from MoneySoft, ValuSource Pro from ValuSource, ValuAdder Business Valuation Software, and Valuation Solution from Sageworks. There are many online tools available, as well.
Before software automated many of the valuation processes, there were only a handful of people who could offer the service because they had developed their systems to manage the complex formulas and calculations. Traditionally these practitioners did their calculations on homemade spreadsheets. Since valuations can be challenged in court, choosing a reputable valuation software platform is essential, because evaluators are often called upon to justify their calculations. Increasingly, today’s Judges and attorneys have become familiar with the leading players in the software space. They tend to have more confidence in the estimates produced by respected software programs than those generated by more traditional homemade methods.
Learning valuation and getting a CVA credential is an excellent way for CPAs to add an in-demand service to their skillset. And now that modern software programs are becoming the industry standard, what was once a very niche offering is now attainable as a supplementary offering.
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