Hot jobs: Valuation specialists needed in good economic times and bad
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Hot jobs: Valuation specialists needed in good economic times and bad

Mar 13, 2023 · 3 min read · AICPA Insights Blog

All businesses have financial value and, to quantify that exact number, a specialist must analyze cashflows, assets, product lines, revenue streams and other data points. Knowing the financial worth of a business is important in situations such as initial public offerings (IPOs), business bankruptcies, divorce proceedings and in mergers and acquisitions.

In these high-stakes situations, businesses of all sizes rely on the expertise of forensic and valuation services (FVS) professionals who can address valuation-related concerns and offer additional guidance on significant business interruptions and challenges, fraud, bankruptcy and other economic concerns.

The business valuation industry is predicted to get a boost over the next three years, driven by factors that include larger corporate profits and an overall better investment environment, according to IBISWorld’s January 2022 Business Valuation Firms Industry Report. These factors will increase demand for valuation professionals.

“Firms are having trouble finding qualified people to do the work and that goes equally for valuation firms and public accounting firms that offer consulting services,” said Mark Smith, JD, CPA, and Director — Valuation Services at AICPA® & CIMA®, together as the Association of International Certified Professional Accountants. “There is a need for valuation professionals.”

With these emerging opportunities in the business valuation industry, CPAs can translate their analytic and financial skill sets into dynamic career possibilities.

A solid financial foundation

Through their appraisal reports, FVS professionals deliver business owners unbiased reporting on the overall value of their company. This work often falls under areas of litigation support, financial reporting, Internal Revenue Service reporting and consulting — and the financial projects within these areas are broad and varied, from divorce proceedings to business purchases, valuation of intangible assets to estate gifts.

“You don’t always have the monotony of doing the same thing,” said Teresa Brenan, CPA and Senior Manager — Valuation Services at the Association. “There is so much more of a different wheelhouse of work that you’ll be involved in.”

CPAs working in tax and audit have a skillset that easily translates into business valuation, said Smith. “In that traditional career path for a CPA, you really get an amazing foundation for how to look at financial statements, how to understand what goes behind those financials … and the strengths and weaknesses of the numbers.”

CPAs and FVS professionals appreciate not just a joint understanding of financials, but the importance of working closely with clients to get the full story and scope of business — and that broader picture is key.

“You have to understand what the management of a business does in order to provide value,” explained Smith.

Big growth drivers for FVS

Despite revenue of the valuation industry dipping 2% to $6.6 billion, IBISWorld predicts that cash-rich corporations looking to purchase, retiring business owners wanting to sell and other factors will reverse this trend and stimulate demand.

Recent trends in mergers and acquisitions (M&A) support this. Frequency of M&A rose in 2020 and is likely to continue upward, according to IBISWorld. There is a correlation between a heightened M&A market and the demand for business valuation specialists: With higher corporate profits, there is more of the cash on hand that enables corporations to purchase other companies more easily, thus boosting the need for business valuation.

In addition to M&A, retirement instances also drive business-selling trends and, thanks to retiring Baby Boomers, there will be an influx of purchasable businesses.

“In terms of Baby Boomers retiring, there is an incredible wealth transfer going on,” explained Smith. “When you transfer ownership of a business, it requires valuation for a whole host of reasons, whether it’s tax compliance or estate and gift purposes.”

Before that sale or transfer can even begin, the value must be known. “Am I transferring a business that’s worth $1 million or am I transferring a business that’s $10 million? And how do I figure that out?” asked Smith.

While the selling market is currently hot, a recession could turn the tide quickly. If the economy turns there could be an increase in bankruptcy filings, tests for goodwill impairment or writing off part of the business — and FVS professionals are versed in those, too.

“There are opportunities for valuation professionals when the economy is doing well and there are opportunities when the economy is not doing well,” said Smith.

Increased demand for accredited experts

There will always be a need for FVS professionals because they deliver vital information needed for a range of situations, and market trends cite a critical need now.

It’s important that business valuation specialists position themselves as experts in their field, and they can do so with the AICPA® Accredited in Business Valuation (ABV®) credential.

While CPAs and finance professionals can practice business valuation without the credential, earning the ABV demonstrates expertise, ethical responsibility and credibility, said Brenan. In certain working environments where work experience and education are scrutinized, like during court proceedings, the ABV is respected.

The ABV demonstrates a professional’s commitment to continuously improving valuation skills and expertise and promoting a greater level of confidence for current and potential clients.

Earning the AICPA® Accredited in Business Valuation (ABV®) designation will solidify a professional’s expertise and help meet these predicted job market demands. And in this hot market, it’s important to stay in the know with the latest resources.

Beth Roessner, M.A.

Beth Roessner is a senior content writer at AICPA & CIMA, together as the Association of International Certified Professional Accountants.

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