Statement on Standards for Valuation Services (SSVS) 1: Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset

In recent years, the need for business valuations has increased significantly.  This standard is designed to improve the consistency and quality of business valuations performed in the practice of public accounting.

Helpful appendices cover a list of assumptions and limiting conditions for a business valuation, as well as a glossary of international business valuation terms.

To obtain a gratis electronic copy of SSVS1, visit the Forensic & Valuation Services website here.

Foreword

Why Issued
Valuations of businesses, business ownership interests, securities, or intangible assets (hereinafter collectively referred to in this foreword as business valuations) may be performed for a wide variety of purposes including the following:

1. Transactions (or potential transactions), such as acquisitions, mergers, leveraged buyouts, initial public offerings, employee stock ownership plans and other share based plans, partner and shareholder buy-ins or buyouts, and stock redemptions.

2. Litigation (or pending litigation) relating to matters such as marital dissolution, bankruptcy, contractual disputes, owner disputes, dissenting shareholder and minority ownership oppression cases, and employment and intellectual property disputes.

3. Compliance-oriented engagements, including (a) financial reporting and (b) tax matters such as corporate reorganizations; S corporation conversions; income, estate, and gift tax compliance; purchase price allocations; and charitable contributions.

4. Planning oriented engagements for income tax, estate tax, gift tax, mergers and acquisitions, and personal financial planning. In recent years, the need for business valuations has increased significantly. Performing an engagement to estimate value involves special knowledge and skill.

Given the increasing number of members of the AICPA who are performing business valuation engagements or some aspect thereof, the AICPA Consulting Services Executive Committee has written this standard to improve the consistency and quality of practice among AICPA members performing business valuations. AICPA members will be required to follow this standard when they perform engagements to estimate value that culminate in the expression of a conclusion of value or a calculated value.

The Consulting Services Executive Committee is a body designated by AICPA Council to promulgate technical standards under Rule 201, General Standards (AICPA, Professional Standards, vol. 2, ET sec. 201.01), and Rule 202, Compliance With Standards (AICPA, Professional Standards, vol. 2, ET sec. 202.01), of the AICPA Code of Professional Conduct.