First-ever survey of young BVers gives rare insights

Preliminary results of a new survey confirm that most BV practitioners were not made aware of the profession in their early years. About two-thirds of respondents say they were not made aware of the profession in college, in either graduate or undergraduate studies. Until now, we’ve heard anecdotally that many young practitioners discover BV by accident, and this new survey backs that up.

The survey, conducted by BVR and the BV recruiting firm Borrowman Baker, was launched with the cooperation and support of the American Society of Appraisers (ASA). Respondents are ASA members under the age of 40 whose primary discipline is business valuation. The goal is to gain some insights and perspectives to help the profession better attract and develop the younger generation of practitioners.

Reach out. Once students hear about BV, it could change the course of their career plans. “I planned to go into audit, but I met someone who was a CPA and did valuation work,” one respondent said. “Hearing what valuation was made me pursue it instead of accounting work.” For its part, the ASA is urging its members to visit their alma maters and talk about the profession to students. This idea works. “I took a business valuation elective in business school and a partner at a BV/FLS shop did a guest lecture. That is how I learned about the BV profession.” This respondent now has several years of BV experience under his belt.

We know a number of firms that maintain a presence at local colleges and have success recruiting from those schools. But, clearly, more firms and valuation groups need to ramp up their efforts to increase awareness.

Other insights. Much can be learned from the young generation of BV practitioners. Other survey questions asked about such things as the quality of training they received, why they left their last firm, and whether they still see themselves doing valuation work five years from now.

BVR will post as a free download the full survey results once they have been compiled. In the meantime, more detailed results will be in the December issue of Business Valuation Update.

Most firms can’t forecast impacts of ESG

A new global survey highlights the difficulty in quantifying the financial impacts of environmental, social, and governance (ESG) factors. Over half the firms surveyed (54%) say they are unable to estimate the financial impacts of any ESG factors in their forecasting. Of the rest, 42% say they could partially estimate the impacts and 4% said they could fully estimate it. At this point, most firms don’t believe ESG has a very material impact on firm value, but the reason for this could be the difficulty in quantifying it.

The International Valuation Standards Council (IVSC) conducted the ESG survey, and the majority of responses came from firms based in Europe (67%). Other responses came from firms located in Asia (17%), North America (11%), and Africa (6%). Respondents were a mix of small and medium-sized firms and multinational organizations. The full results are available if you click here.

Extra: A new research paper from the CFA Institute proposes a performance evaluation and attribution framework for ESG investment strategies.

Competition keeps cost of capital platform prices down, experts believe

That’s the feeling of a panel of veteran valuation experts who presented at the recent Forensic and Valuation Conference hosted by the Virginia State Society of CPAs. One commenter felt that you’d be paying “double or triple” the current price if users had only one choice. For a long time, the only game in town was from Duff & Phelps (now Kroll), first with its Valuation Handbook series and then with its online Navigator, launched in early 2018. Feeling that the profession needed a simpler, less expensive alternative, BVR came out with its Cost of Capital Professional later that same year. When they go head-to-head, both platforms produce results that are not that different. A 2019 article in Business Valuation Update reported on the head-to-head demo. More recently, an article in the October 2022 issue of Hardball With Hitchner confirmed that the two platforms still produce similar results.

Survey reveals use of Excel add-ins for the GPCM

As part of BVR’s ongoing surveys related to data resources and methodologies, we recently ran a short survey on the use of Excel add-ins for the guideline public company method (GPCM). The survey generated about 50 respondents, and here’s what we found:

• Almost half (45%) of the respondents use the GPC method in 50% of their valuations or more.

• Only 15% said they never use the GPC method.

• Of those who use the GPC method, 71% use an Excel add-in.

• The most commonly used add-in was from Cap IQ, followed closely by Tagnifi.

• Of those who use an add-in, 44% use it exclusively (no other resource besides the add-in). Of the 56% that use another resource in addition to the add-in, it was primarily EDGAR (SEC) for fundamentals and Yahoo Finance for stock prices—presumably to verify data from the add-in.

• Of those currently not using an add-in, 100% said they would be interested in using one.

Our thanks to those of you who responded, and we’ll continue these surveys in the future.

Sessions we’re eyeing for next week’s AICPA FVS conference

BVWire will be at the AICPA & CIMA Forensic and Valuation Services Conference November 14-16, which will be live from the Wynn Las Vegas and Encore. There’s a lot to choose from in the almost 60 sessions on the agenda, but we’ve checked off a few so far that we plan to attend:

• Cost of Capital Ramifications of the Russia-Ukraine War and Global Inflationary Pressures; Carla Nunes (Kroll) and James Harrington (Kroll);

• Personal vs. Enterprise Goodwill: How the Analysis Lies Within the Facts; Audra Moncur (Wipfli) and Karolina Calhoun (Mercer Capital);

• Forensic and Valuation Experts in a Shareholder Dispute: How Two Experts Look at the Same Data Differently; Brett Axelrod (Fox Rothschild) and Hubert Klein (Eisner Advisory Group);

• Complex Business Asset Tracing—Separate or Marital PLUS Active or Passive; Stefanie Jedra (Marcum) and Josh Shilts (Shilts CPA);

• When Valuation Experts Disagree (Panel); Harold Martin (Keiter), Bethany Hearn (CLA), Karolina Calhoun (Mercer Capital), and James Hitchner (Financial Valuation Advisors);

• Moving on-Chain: Unwinding the Complexity of Crypto; Eric Forni (DLA Piper), Peter Altman (Akin Gump Strauss Hauer & Feld), and Kevin Madura (AlixPartners);

• Valuation Hot Topics; Lisa Cribben (Wipfli), Stacy Collins (Financial Research Associates), Chris Mercer (Mercer Capital), and James Hitchner (Financial Valuation Advisors);

• Business Combination Guide (recently released draft); Adam Smith (PwC), Mark Edwards (Grant Thornton), Gary Roland (Kroll), and Frederik Bort (KPMG);

• The Forensic: How the CIA, a Brilliant Attorney and a Young CPA Brought Down Howard Hughes; Paul Regan (Hemming Morse, CPAs); and

• Marketability Discount—Why Are There Such Varying Opinions?; Brian McIntyre (Withum Smith Brown) and Natalya Abdrasilova (Boyle, Deveny, & Meyer).

The conference will also be streamed online, and there’s a “select 7” option that allows you to focus on specific topics to match your needs. The event offers 12 to 20 CPE credits, and the agenda has something for everyone. You can get more details and see the full agenda on the conference site if you click here. Watch for our coverage in future issues!

NACVA’s December conference has an á la carte option

You can pick just one session—or as many as you like—from the next NACVA “super” conference that will be December 14-16 in-person from two locations: Park City, Utah, and Fort Lauderdale, Fla. The á la carte option is for virtual attendance, and each session you choose is $110 ($99 for NACVA members). BVWire attended NACVA’s last conference this past August (see some takeaways here), and we see some interesting topics and top speakers in the featured sessions for December (click here).

Industry multiples in Europe decrease in 2Q22

Almost all sectors/industry groups presented in a recent Kroll report observed a decrease in their EV/EBITDA multiples during the second quarter of 2022. Semiconductors and semiconductor equipment was the industry group with the highest decrease (a change from 17.4x to 10.1x, or 7.3x lower compared to Q1 2022’s multiple). The report, “Industry Multiples in Europe—Q2 2022,” examines trading multiples for various key industries in Europe as of June 30, 2022. The analysis uses constituents of the STOXX® Europe Total Market Index (STOXX Europe TMI), which covers about 95% of the free float in Europe, the report says. The full report is available if you click here.

BV movers . . .

People: Jason Soman, CPA/ABV, ASA, CFE, CDFA, has launched the business valuation and forensic accounting firm Accounting & Valuation LLC, which specializes in the complex accounting and valuation needs of family lawyers and divorcing spouses; the firm is based in Boca Raton, Fla., and its website is DivorceForensicAccountant.com … The National Association of Certified Valuators and Analysts (NACVA) has named its outstanding members for the fourth quarter of 2022: Sridhar Ramamoorti, ACA, CPA, CFF, CITP, CGMA, CIA, CFE, CFSA, CGAP, CGFM, CICA, CRMA, CRP, MAFF, an associate professor in the Department of Accounting at the University of Dayton; Jessica Landay, ASA, ABV, CVA, MAFF, who is in business valuation and litigation support services at Harper Hofer & Associates LLC; and Louis J. Pereira, MBA, CBA, ASA, CVA, CBI, president of Merrimack Business Appraisers.

Firms: Strengthening its business valuation capabilities within the life science and technology industries as well as its presence on the West Coast and in Texas, Stout has acquired Vantage Point Advisors Inc.; the firm’s founder and CEO, Todd Poling, and president, Brent Glova, were named managing directors in Stout’s Valuation Advisory group, and Glova was also named the leader of Stout’s San Diego office, the company’s 26th office globally … Chicago-based Baker Tilly is adding Tempe, Ariz.-based Henry+Horne, a firm with 160 professionals who provide audit, accounting, tax consulting and compliance, litigation and valuation, estate, gift and trust, and international services to closely held businesses and high-net-worth individuals … Atlanta-based Aprio LLP will add Aronson LLC of Rockville, Md., a firm with 350 team members, including 42 partners … New Philadelphia, Ohio-based Rea & Associates is adding Massillon, Ohio-based ARCIS Technology Group Inc., which provides IT support services, including IT consulting and project management, firewalls, cloud-based data storage, wireless consulting, telecommunications infrastructure support, software upgrades, and disaster recovery … Syracuse, N.Y.-based Dannible & McKee has acquired Buffington & Hoatland CPAs of Auburn, N.Y., which provides accounting, tax, and consulting services … Voorhees, N.J.-based firm Bowman & Co. is adding Ragone Lacatena Fairchild & Beppel PC (RLFB) of Haddonfield, N.J. … Houston-based Weaver has acquired Lafayette, La.-based PRM CPAs + Advisors, with offices in both Lafayette and Houston; PRM has an oil and gas practice in Texas and Louisiana, as well as a high-net-worth tax practice, primarily focused on healthcare … New York City-based EisnerAmper LLP grows its presence in Southern California by adding Lindsay & Brownell CPAs & Advisors (LB Advisors) of La Jolla, Calif., a firm with 12 partners and 74 professionals providing tax, accounting, and business consulting services … Troy, Mich.-based Doeren Mayhew is adding Kaplan Merzlak PC of West Bloomfield, Mich., a firm that provides accounting, tax, and consulting services … Los Angeles-based SingerLewak is combining with Roschke & Wall CPAs of Agoura Hills, Calif., a woman-owned accounting practice providing back-office accounting and tax services.

Please send your professional and firm news to us at editor@bvresources.com.

CPE events

• Look Under the Covers: Finding Assets and Income for a Divorce Valuation. November 10, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Michele Laws. CPE credits: 2.0.

Financial data in a company’s books and records do not tell the entire story of the business. For that, you’ll need a touch of forensic analysis intercept—this webinar will show you how.

• Embracing the Hockey Stick: Alternative Approaches to Formulating and Assessing Projections. November 15, 10:00 a.m.-11:40 a.m. PT/1:00 p.m.-2:40 p.m. ET. Featuring: Michael Blake (Brady Ware & Co.). CPE credits: 2.0.

Learn about some tools you may not be familiar with for creating and/or validating management projections—one of the most challenging elements of a business or intellectual property appraisal.