Valuation Industry Insight
By Eva Lang
Duff & Phelps (NYSE: DUF) is the largest valuation firm in the U.S. The SEC filings and other publicly available data on this firm shed some light on the operations of the mostly private business valuation industry.
The transcript for the February 26, 2009, earnings call as reported by Seeking Alpha has DUF CEO Noah Gottdiener saying that the valuation advisory business (which includes FAS 141 financial reporting and FAS 142 impairment valuation practices, the fixed assets real estate practice, and general valuation services) grew 3% over last year. In the second half of 2008, DUF saw a significant increase in impairment testing but overall growth has been tampered by the M&A environment, and demand for FAS 141 valuation has declined.
Despite the challenging economy, CFO Jake Silverman noted that in 2008 the financial advisory rate per hour increased 7% to $3.44 from $3.23 and the financial advisory headcount increased 13% to 841 client service professionals from 746. However utilization was 63%, compared to 69% in the prior year and revenue for professional was $380,000, compared to $413,000 in 2007.
CEO Gottdiener used a company press release to predict growth in valuation services. “Even though the events over the past year have altered the complexion of both the financial services industry and, more generally, corporate America, we have seen – and expect to continue to see – solid demand for our valuation expertise, restructuring advisory work and general corporate finance consulting.”