“We are not alone” is a popular phrase in science fiction movies. It is used when humans first discover that they are not the only intelligent life in the universe. The discovery changes the whole human perspective, both in terms of how we view the universe and how we view ourselves and our potential.
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Valuation is a profession where the judgment born of experience is exercised every day. In litigation, the Courts both allow for it and demand it, and those lacking it may face a challenge to their ability to testify. Every experienced valuation professional can tell you of a time when a fresh out of college staff person prepared a financial valuation model that was text-book correct, yet did not yield a sensible valuation conclusion. It is not that the model’s logic is incorrect, but rather that models are a simplification of reality. Experience provides the perspective that lets you know when a model is not properly capturing reality. No wonder that one of the most respected credentials in business valuation, the Accredited Senior Appraiser (“ASA”) designation provided by the American Society of Appraisers, specifically requires five years of full time valuation experience. Candidates who complete the courses and report requirement but who have less than five years of experience receive the Accredited Member designation, which tells you the person is highly schooled in valuation techniques, but may not have fully developed the mature judgment derived from experience.
How can a person new to the valuation profession accelerate the development of his professional judgment? While working on a variety of valuations is indispensable, it also makes sense to pursue a credential such as the ASA, because the courses are taught by practitioners in the field who interweave the theory with war stories drawn from experience. Another way to accelerate your professional development it to keep up with current BV issues through a sites such as AccountingWEB and BV Wire News. http://www.bvwirenews.com/
Such news sites carry the latest problems and court cases affecting valuation professionals, which naturally include those cutting–edge, exceptional cases where judgment is required. (Of course, you should also religiously read my BV blog as well, but the fact that you are here shows you already knew that!).
While it is easy to point out the lack of judgment that can afflict fresh out of college BV professionals (even as we ask them to show us the latest Excel and Word functions), it is important to admit that even expert BV professionals can benefit from the perspective of another expert. A business valuation colleague of mine at a previous employer had a saying that reflects the wisdom of this experience. He said, “A one man business valuation firm is a dangerous thing.” This is not to say that a solo practitioner cannot do valuation well, it is instead an acknowledgement that even the most experienced valuation professional benefits from hearing the perspective of another BV professional on those occasions when a valuation presents unique challenges.
Fortunately, business valuation is a rather collegial profession. Unlike lawyers, we do not advocate for one side, but instead we weigh the facts and make judgments to arrive at our opinion of value that best reflects the economic reality. Today’s technology makes it easy to run an unusual question past a number of professionals. On Linked-In, there are a number of groups that discuss valuation issues such as “Business Valuation and Advisory Network”, “Business Valuation Professionals”, “Corporate Valuation Professionals”, “Expert Witness” and “Valuation”. These groups can provide a range of opinions that vary from truly wise to self-promoting, but they are public and not necessarily the best way to discuss a sensitive valuation issue.
Is there an executive level solution, where an experienced professional can get advice and perspectives from recognized experts in the BV field? A Cadillac solution that provides the best of continuing education webinars, ability to discuss issues with top BV experts, an online research library, and conferences to network with and learn from the profession’s brightest stars? Yes, it is called the Financial Consulting Group (“FCG”). http://www.gofcg.org/
FCG is North America’s largest network of independently-owned business valuation, litigation support and financial consulting firms. Patterned after similar confederations of accounting firms such as Baker Tilly and MSI, FCG’s membership includes both accounting firms who do valuation as well as specialist BV firms. Nationally recognized experts such as James Hitchner, Ronald Seigneur, Steven Hyden, Michael Mard, Eva Lang, Kevin Yeanoplos, Shannon Pratt and many others are all members of FCG. Firm membership includes access to a private extranet for valuation questions. FCG firms may collaborate on engagements where one firm possesses a special expertise. Through arrangements like this, a smaller BV firm can match the capabilities of a much larger practice. FCG also focuses on executive level issues involved in managing a valuation practice and maximizing its profitability. Even the most experienced BV practice leader can benefit from that.
So we in the BV profession are definitely not alone. Through collaboration and technology, we can leverage our capabilities nationwide, while through organizations like FCG, we can even reach out to the stars.