Certifications and Designations

Business Valuation Analysts:  Certifications and Designations

Business valuation practitioners should have very specific experience and expertise. The expertise is developed through rigorous academic and professional training. Individuals who retain (and individuals who rely on) valuation services should carefully evaluate the analyst's training, credentials, and experience.

Credibility is an important characteristic for a valuation analyst. While a reputation for honesty and quality of work is critical to building credibility, earning the appropriate professional credentials also reflects on the analyst’s ability.

The certification process, from the multiple certifying associations, is at the core of the business valuation profession. It is one of the key ways firms distinguish themselves, withstand challenges Dalbert (see article on expert challenges) and keep their inventory of skills current.

According to a recent BVR survey, the typical firm in the business valuation market has 2.1 educational or professional designations per employee. If you only include appraisers, and senior and junior analysts, the ratio jumps to 2.4 certifications per professional staff.

An undergraduate or graduate curriculum in economics, accounting, and finance provides an appropriate academic foundation for the business valuation practitioner.  Largely influenced by the presence of large M&A and accounting firms which provide business valuation services to clients, two of the top three of the most common professional designations are specifically not necessarily appraisal-related, but, in fact, professional (the CPA) and educational (an MBA).

Also, a professional designation such as chartered financial analyst (CFA) is a common credential for valuation analysts. The CFA designation is earned through the CFA Institute (see chart below).

The chartered financial analyst program is a widely recognized credential that demonstrates the competence and integrity of financial analysts. Three levels of examination measure a candidate’s ability to apply the fundamental knowledge of investment principles at a professional level. To be awarded the CFA designation, a candidate must:

•  sequentially pass the Level I, Level II, and Level III examinations,

•  have at least three years of acceptable professional experience working in the investment decision-making process, and

•  fulfill CFA Institute  membership requirements.

There are four organizations in the United States that offer professional accreditations specifically in business valuation.

These four organizations are:

•  the American Institute of Certified Public Accountants,

•  the American Society of Appraisers,

•  the Institute of Business Appraisers, and

•  the National Association of Certified Valuation Analysts.

Business appraisal designations from the AICPA, ASA, IBA and NACVA are all significantly more prevalent than they were, say, in 2005, and are similarly common.

ASA

The American Society of Appraisers, formed in 1936, is a multidisciplinary organization that offers education and professional accreditation in many appraisal disciplines. These appraisal disciplines include: real property, machinery and equipment, personal property, and a number of technical valuation specialties, as well as business valuation. Since 1984, the business valuation discipline has been the ASA’s fastest growing area of accreditation. The ASA offers certification as (1) an accredited member (AM) and (2) an accredited senior appraiser (ASA). Both of these certifications require (1) certain work experience in business valuation, (2) successful completion of various exams, and (3) submission of written business appraisal reports that earn the approval of the association’s Board of Examiners.

ABV

The American Institute of Certified Public Accountants (AICPA) started a business valuation specialty accreditation program in 1997. They offer an Accredited in Business Valuation (ABV) designation for CPAs with experience in business valuation. To earn the ABV designation, a candidate must pass a written examination. To be eligible to sit for the written examination, the candidate must:

•  be a member in good standing of the AICPA and hold an unrevoked CPA certificate or license issued by a recognized state authority, and

•  provide evidence of 10 business valuation engagements/projects that demonstrate substantial experience and competence to be eligible to sit for the ABV examination.

To maintain the accreditation (after passing the examination) each credential holder must:

•  submit at the conclusion of every three-year period documentation demonstrating substantial involvement in five business valuation engagements, and

•  complete 60 hours of related CPE during the same three-year period.

CBA

The Institute of Business Appraisers (IBA), formed in 1978, offers certification as:

•  an accredited by IBA (AIBA),

•  a certified business appraiser (CBA),

•  a master certified business appraiser (MCBA), and

•  a business valuator accredited for litigation (BVAL).

Certification as a CBA is available to members of the Institute of Business Appraisers who demonstrate that they have attained a high level of professional competence and conduct. To obtain the CBA credential:

•  The applicant must have successfully completed at least 90 classroom hours of upper level course work in addition to having earned a 4-year college degree, or

•  The application must have five years of full-time active experience as a business appraiser. The applicant’s experience must include valuation of a variety of business types and appraisals for a variety of purposes.

•  The applicant must provide four satisfactory references, including two references as to personal character and two references as to professional competence as a business appraiser.

•  The applicant must complete a four-hour, proctored, written examination covering the theory and practice of business appraisal.

•  The applicant must pass a comprehensive written examination on current business valuation theory and practice.

•  The applicant must submit two demonstration reports demonstrating a high degree of skill, knowledge, and judgment as a business appraiser. All CBAs are required to document 24 hours of continuing professional education every two years.

AVA, CVA

The National Association of Certified Valuation Analysts (NACVA) was formed in 1991 to provide certification and member support services specifically for CPAs and others performing business valuation services. The NACVA offers certification as:

•  an accredited valuation analyst (AVA),

•  a certified valuation analyst (CVA), and

•  a government valuation analyst (GVA).

In order to qualify for the CVA designation, a candidate must:

•  hold a valid and unrevoked CPA license issued by a legally constituted state authority (the Chartered Accountant [CA]certification issued in Canada is considered equivalent to the CPA in the U.S.),

•  be a member in good standing with NACVA,

•  complete a five-day training program as prescribed by NACVA,

•  submit three personal and three business references, and

•  pass a comprehensive two-part examination.

 

 

Table of Valuation Certifications

 

 

Certification

Certifying Organization

URL

CPA

AICPA

http://www.aicpa.org

ABV

AICPA

http://www.aicpa.org

MBA

Multiple

 

CVA/AVA

NACVA

http://www.nacva.com

ASA/FASA/AM

ASA (American Society of Appraisers)

http://www.appraisers.org

CFE (Certified Fraud Examiner)

ACFE (Association of Certified Fraud Examiners)

http:// www.acfe.com

CFA (Certified Financial Analyst)

CFA Institute

https://www.cfainstitute.org

JD

Multiple

 

CBA/MCBA

IBA (Institute of Business Appraisers)

http://www.go-iba.org

PhD

Multiple

 

CFP (Certified Financial Planner)

Certified Financial Planner Board of Standards, Inc.

http://www.cfp.net

CM & AA

AM&AA (Alliance of Merger and Acquisition Advisors)

http:// www.amaaonline.com

CBV

CICBV (Canadian Institute of Chartered Business Valuators)

https://www.cicbv.ca

Chartered Accountant

CICBV

https://www.cicbv.ca/

CFFA (Certified Forensic Financial Analyst)

NACVA (National Association of Certified Valuation Analysts)

http://www.nacva.com

 

The standard business valuation designations are often enhanced by the advanced degrees and certifications from non-BV associations and institutes that pepper many firm resumes. The list of additional degrees, in fact, it's quite impressive, if not daunting. A partial list of some of the honorifics reported in the BVR survey appears below.

 

 

 

Table of non-BV Professional Designations

CIA          Certified Internal Auditor

MA          Master of Arts

BVAL       IBA’s (Institute of Business Appraisers) BV Accreditation in Litigation

CLU         Chartered Life Underwriter

Real Estate License

PE            Mechanical Engineer

CMEAA   Certified Management Accountant

CBI           IBBA’s (International Business Brokers Association) Certified Business Intermediary