ABV Poised for Growth

August 16, 2018

Business valuation is a growing area. ABV is poised to grow with it.

Valuation as an advisory service is seeing incredible growth, with demand steadily increasing. Regulators have taken notice and have cast a spotlight on measuring "areas of uncertainty." As a result, consistent high quality and ethical standards must be maintained for the profession to keep valuation integral to its services. Is the profession prepared for the opportunity?

Once a niche specialty, business valuation has become a global profession. It plays a critical role in advisory services, financial reporting and the regulatory ecosystem. Even individuals have valuation needs related to tax, entrepreneurship, litigation and business succession planning, among other areas. An increase in the volume and types of assets held, plus an oncoming transfer of wealth, will ignite a heightened demand for valuation services in the future. As change occurs almost faster than we can identify it, markets and talent needs are expanding. It’s time to set the stage for the future.

A quickly changing landscape
In the past 30 years, valuation has come to the forefront in matters of financial and non-financial business reporting. With new types of business combinations, investment opportunities and other considerations, valuation is becoming increasingly prominent.

Cryptocurrency provides a good example. Eight years ago, cryptocurrency wasn’t on many people’s radars. Bitcoin’s value was a fraction of a penny, and only a handful of enthusiasts and visionaries invested in and used the currency. Cryptocurrency has since grown both in number (hundreds of cryptocurrencies now exist, with new ones introduced almost daily) and value. And while that value can fluctuate wildly, it’s typically in the hundreds of billions of dollars. Clients and organizations investing in or using cryptocurrencies in transactions sit in an uncertain state, often confused by not only how to account for these holdings, but how to value them for reporting purposes. The opportunity for valuation professionals is in valuing cryptocurrencies held by companies as an asset on their balance sheets and reported in their financial statements.

Expanding market and talent needs
Other opportunities abound as well. Investors, eager for more information to inform their activities, want to know more about a company’s tangible as well as intangible assets, global position, operations and infrastructure and how the company will navigate the regulatory landscape. Assets are changing hands in what is the largest generational wealth transfer in history. All these factors and more are just some of the drivers contributing to an expanding valuation market.

Firms seek valuation professionals
As the market for valuation has increased, firms have strived to keep up with demand for talent to perform valuation services. One way they’ve developed their valuation bench is by hiring or training qualified valuation professionals to support their existing staff—CPAs and CPAs who hold the Accredited in Business Valuation (ABV) credential. These firms want their valuation professionals to have consistent training and credentialing opportunities, fulfilling the firm’s public interest commitment by holding their valuation professionals accountable to the same quality and ethical standards. Bringing other qualified valuation professionals into the ABV credential program, now allowed through a recent governing Council vote on a proposal by the National Accreditation Commission with support from various AICPA committees, provides the most efficient and effective way to achieve that objective.

At the same time, ABV credential holders will reap several benefits from having a wider group of valuation professionals. Specifically, they will own a larger share of the valuation credential market, have a stronger advocacy voice, strengthen their community of colleagues and deepen the talent pool to meet tomorrow’s valuation needs. Expanded eligibility preserves the value of the ABV as it:  

  • Gives the ABV broader recognition: More qualified professionals have the ability to obtain the credential, thereby boosting recognition in the marketplace. Additional ABVs mean more diverse experience and a need for appropriate resources that reinforce and further elevate the credential. It’s a positive feedback loop that translates to the long-term enhanced value of the ABV credential.
  • Addresses firms’ needs: Firms can recruit and retain the talent they need while driving high performance.
  • Protects the public: Consistent standards and quality better serve the public interest and encourage continued reliance on valuation services.

The profession stands ready
The valuation market is thriving. Understanding the changing landscape is essential in supporting the growing valuation area. A strong ABV credential will raise the bar for valuations across the board and help maintain the profession’s integrity.