The BVFLS section of the AICPA recently conducted a survey of business valuation professionals who attended the recent ASA/AICPA business valuation conference.* There were 1,600 folks at the conference which is phenomenal.
The survey results are interesting and here they are (with a few comments from me in brackets):
- The BV profession is highly fragmented. Nearly 70% of the respondents are in firms with 3 or fewer professionals who spend at least 50% of their chargeable time performing valuation services. 37% of the respondents are in firms with $100,000 or less in valuation fees. The fragmentation is more concentrated with CPAs versus valuators who are not CPAs. [No surprises here]
- The BV profession is relatively mature. Almost 2/3 of the respondents are with firms who have been performing formal valuations for more than 10 years. [We have been at this since 1982.]
- The biggest valuation practices employ a large number of professionals who are not CPAs. [Our firm, Mercer Capital, is one of the largest independent business valuation firms in the nation and we have only a handful of CPAs in our analytical staff.]
- Full-service accounting firms tend to have a higher percentage of their valuation revenues from tax valuations than other types of firms.
- By a wide margin, the top two ways respondents obtain new valuation engagements are 1) Prior relationships; and 2) Reputation in the community [There is a huge opportunity here for a marketing strategy and expertise to help these firms get beyond relying almost solely on relationship selling which means that if the rainmaker walks out the door, so does the practice.]
- A strong majority of respondents who have an opinion believe the valuation profession will consolidate within the next 5 years. [Wouldn't surprise me.]
- 70% of the respondents believe the number of full-time valuators will increase.
- The top factors affecting valuation practice are 1) Keeping up with the volume of valuation information and the related costs; and 2) Finding competent valuation staff
- Valuators who perform fair value measurement for financial reporting is concentrated. About one-half of the respondents do not perform any fair value (FV) measurement work. Another 28% are in firms with $50,000 or less in FV fees. [This is an interesting statistic for our firm since we do provide such services.]
The bottom line, as my boss Chris Mercer says frequently on his blog, is that business valuation is an ever-changing profession but an exciting one. If you are to be successful, you've got to have, at a minimum, credentials, experience, analytical horsepower, and marketing thrust.
If you're interested in business valuation-specific educational articles, visit Mercer Capital's library of articles.
* There was a bit of alphabet soup at the beginning of this post. The BVFLS section of the AICPA is the Business Valuation and Forensic & Litigation Services section. And the ASA is the American Society of Appraisers.
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