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GUIDE TO BUSINESS VALUATION CREDENTIALS

February 10, 2020

GUIDE TO BUSINESS VALUATION CREDENTIALS

Credentialing of business appraisers comes from different organizations conferring different designations. Among the more popular and often encountered are the following along with the requirements to obtain the designation.

ASA (Accredited Senior Appraiser)

This is sponsored by the American Society of Appraisers. To obtain an ASA, one must:

  1. Have 5 years of verified full time experience doing appraisals in that discipline for the Accredited Senior Appraiser designation.
  2. Must complete ASA’s 4 Principles of Valuation (POV) courses in Business Valuation and successfully pass an exam upon completion of each level. Alternatively, there are options to challenge each course by reviewing the course materials and passing the corresponding exam or holding a designation or have completed course work with another organization that has equivalent course work to BV201-BV204. See ASA website.
  3. Continuing professional education – 100 credits every 5 years
  4. Have two actual appraisals pass a critical peer review. The reports are graded for technical competence, compliance with USPAP, and compliance with ASA’s Principles of Appraisal Practice and Code of Ethics.
  5. Have a four-year college degree.
  6. Provide client referrals and recommendations, which involve detailed investigation about the appraisal work performed.
  7. Pass the 15-hour course and exam on Uniform Standards of Appraisal Practice (USPAP)
  8. Pass ASA Online Ethics Exam (open book exam).

The ASA designation for business appraisers covers the valuation of business interests, intangible assets (patents, trade secrets, goodwill, etc.)

CFA (Chartered Financial Analyst)

This credential is sponsored by the CFA Institute (formerly the Association for Investment Management and Research or AIMR). The CFA Institute is not strictly an appraisal organization in that its members are primarily securities analysts, portfolio managers, investment bankers, and other investment consultants. However, the CFA is relevant to the business valuation field and is difficult to obtain. This is the credential of choice among public company stock analysts and other professionals listed above.

To obtain a CFA, one must pass three rigorous full-day examinations over a multi-year period, typically over 3-4 years. The exams cover a broad knowledge base, including the analysis and appraisal of closely held companies.

ABV (Accredited in Business Valuation)

The American Institute of Certified Public Accountants (“AICPA”) sponsors this credential. The AICPA accurately noted that many CPAs were interested in getting additional recognition for valuing businesses and were obtaining the CVA credential described above.

Since the AICPA designed the ABV to compete with the CVA. To obtain this credential, one must:

  1. Hold an unrevoked (but not necessarily active) CPA license.
  2. Participate in 10 valuation assignments.
  3. Complete 120 hours of valuation education every 3 years.
  4. Pass the ABV Exam. This exam need not be taken by any ASA (see above) as the two sponsoring organizations grant exam equivalency as does the CFA Institute, see respective websites for more information.
  5. Candidates must have 1,500 hours of business valuation experience within the 5-year period preceding the credential application.
  6. All candidates must complete 75 hours of valuation-related continuing professional education within the 5-year period preceding the date of the credential application.

ABVs need not comply with USPAP in order to comply with rules of their sponsoring organization or to maintain their certificates. Many ABVs do not follow USPAP.

CVA (Certified Valuation Analyst)

A privately held; for-profit business sponsors this credential. To obtain a CVA, one must:

  1. Hold an active, valid and unrevoked CPA license.
  2. Certain experience requirements as provided on the National Association of Certified Valuators and Analysts (NACVA.com). Complete this organization’s optional five-day training course, submit 3 personal and 3 business references.
  3. Pass a comprehensive, 5-hour multiple choice proctored exam.
  4. 60 hours of CPE every 3 years.

CVAs and AVAs need not comply with USPAP in order to comply with rules of their sponsoring organization or to maintain their certificates. Most CVAs and AVAs do not follow USPAP.

CBA (Certified Business Appraiser) and Master Certified Business Appraiser (MCBA) – NACVA (above) acquired the organization known as the Institute of Business Appraisers (IBA).

In 2016 NACVA dissolved the IBA and as of the end of 2018 holders of the CBA or MCBA need to comply with NAVCA’s annual recertification policies.

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