Understanding Business Valuation

Written for the CPA by a CPA, this course combines real-world experience and all of the fundamental information in an easy-to-digest style. Understanding Business Valuation is a great in-depth first course for those seeking to learn more about this hot, premium-priced service for clients and attorneys.

Objectives: 

• Obtain an overview of the basic business valuation process
• Accept the engagement, comply with professional standards and report the engagement results
• Gather and analyze economic, industry and company analyzing data
• Apply the market, asset and income approaches
• Choose discount and capitalization rates as well as discounts and premiums
• Understand the key IRS rulings

Prerequisite:  None

Accepted for CFP^® credit.

Beyond This Course

Participants can expand their knowledge of business valuation principles by reading a comprehensive introduction to the field, such as Understanding Business Valuation, written by Gary Trugman (this course’s author) and published by the AICPA. (Note. In 2005, the AICPA will offer a self-study course based on Trugman’s text.)

Additional training is available through the AICPA. Interested persons can see the online CPE course catalog of BV courses at http://www.aicpa.org/BVFLS/Events.

Business Valuation Essentials

For education in the fundamentals, the AICPA offers the Business Valuation Essentials series of courses offered through the state CPA societies. These six courses, ranging from basic to intermediate in level, offer a comprehensive education in business valuation. They are also important steps along the “Pathway to ABV,” the AICPA’s recommended program of preparation for CPAs to qualify for its Accredited in Business Valuation (ABV) credential.

The Business Valuation Essentials series is based upon one of the industry’s indispensable resources, Financial Valuation: Applications and Models and Financial Valuation Workbook, created by many of the nation’s most respected and experienced valuation professionals and published by John Wiley & Sons, Inc.1 Together, the learning tools and instructors who have either contributed to the books or demonstrated valuation excellence will provide you with a top-notch education in valuation.

Whether you are testing the waters of business valuation or interested in growing a thriving practice niche and becoming an ABV, the Business Valuation Essentials courses are your best means of achieving a comprehensive education that includes information on the best and most current practice standards.

Course Descriptions

Business Valuation Essentials 1 – 5

This course series provides an outstanding education in the core knowledge and skills needed for a distinguished career in business valuation. The courses are based upon the emerging industry standard texts, Financial Valuation: Applications and Models and Financial Valuation Workbook, whose contributors include twenty holders of the AICPA’s ABV credential. The course materials have been adapted and significantly supplemented by the texts’ editor and coauthor James R. Hitchner, CPA/ABV, ASA.

Each of the five courses addresses fundamental relevant theory, applications, best practice methods and controversies through easily understood text, examples and exercises.

• Valuation Introduction, Research and Analysis and the Asset Approach (Business Valuation Essentials 1) discusses basic valuation standards of value, research techniques, analysis of financial statements and company risk factors, and the asset approach to value.
• The Income Approach and Cost of Capital (Business Valuation Essentials 2) discusses the income approach and cost of capital/rate of return.
• The Market Approach, Discounts and Premiums (Business Valuation Essentials 3) discusses the market approach, valuation discounts and premiums.
• Reports, Standards, and Tax Valuations (Business Valuation Essentials 4) discusses types of reports, valuation standards, and tax-related valuations.
• Valuation of Specialized Areas (Business Valuation Essentials 5) discusses valuation in engagements involving divorce, small businesses, professional practices, shareholder disputes, ESOPs, S Corps., preferred stock, stock options, restricted stock and intangible assets including SFAS 141/142.

Business Valuation Essentials Case Study (BVECS)

Based on Financial Valuation Workbook, co-authored by James R. Hitchner and Michael J. Mard, this course presents a comprehensive case study that includes the engagement, industry and company information; the income and market approaches; and the estimate of value. Through 76 easily understood exercises (including detailed answers), the course serves as a review of the relevant theory, applications, best practice methods and controversies addressed in the other Business Valuation Essentials courses. The Valuation Essentials Case Study serves as a capstone for the entire Business Valuation Essentials series.

ABV Credential Program: An Overview

What is ABV?

An ABV is a CPA credentialed as a business appraisal specialist and recognized for a unique ability to bridge between valuation methodologies and accounting principles and standards. ABVs define value in a number of areas, including:

Mission

The mission of the ABV Credential program is to provide a community of business valuation experts with specialized access to information, education, tools, and support that enhance their ability to make a genuine difference for their clients and employers. The ABV credential program allows credential holders to brand or position themselves as CPAs who are premier business valuation service providers. ABV credential holders differentiate themselves by going beyond the core service of reaching a conclusion of value, by also creating value for clients through the strategic application of this analysis.

Objectives

The ABV credential program is designed to achieve the following objectives:

• To increase public awareness of the CPA as the preferred business valuation professional
• To increase exposure for CPAs who have obtained the ABV credential
• To enhance the quality of business valuation services that members provide
• To ensure the continued competitiveness of CPAs versus other valuation services providers through continuous access to a comprehensive community of resources and support
• To increase the confidence in the quality and accuracy of business valuation services received from CPA/ABV providers

Benefits of Becoming an ABV

RECOGNITION. Distinguishes you from other valuators.

REVENUES and GROWTH. Positions your firm for premium value service opportunities and practice growth.

MARKETPLACE ADVANTAGE. Builds on CPA core competencies — ABV is a premier valuation credential specifically designed for CPAs and the unique perspective they bring to the practice.

COMMUNITY and COLLABORATION. Joins you to a community in which you can share, debate, network and communicate with other ABVs; leverages the exclusive, ABV online discussion forum as an important collaborative workspace.

EXCLUSIVE BENEFITS. Gives you exclusive access to resources, tools and information to grow your practice and market your specialty. Visit www.aicpa.org/BVFLS and click the “Membership” tab for more details on benefits to ABVs.

The Pathway to ABV: How to Become a Credential Holder

To be eligible to apply for the ABV credential, a candidate must:

• Be a member in good standing of the AICPA.
• Hold a valid and unrevoked CPA certificate or license issued by a legally constituted state authority.
• Pass a comprehensive Business Valuation Examination based upon the AICPA ABV Examination CSO (content specification outline), attached as the Appendix to this chapter.
• Within 24 months of passing the AICPA ABV examination, provide evidence of 10 business valuation engagements/projects that demonstrate substantial experience and competence. Substantial experience required must be obtained during a valuation engagement/project, which is defined as:
  “Sufficient research and analysis to arrive at a conclusion or estimate of value, of an entity, instrument for economic benefit, requiring a documented conclusion.”
• Within 24 months of passing the AICPA ABV examination, provide evidence of 75 hours of life long learning related to the business valuation body of knowledge.
• Pay an application fee of $550. This fee includes the ABV’s gratis membership in the AICPA BV/FLS Membership Section. Renewal dues are $350 per year after the first year and again include gratis membership in the BV/FLS Section.

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