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A Day in the Life of a Business Valuator

A business valuator is a certified public accountant (CPA) who has chosen to specialize as an appraiser of businesses, both large and small. Certified public accountants sell their financial services to the public and to private businesses for a fee. A CPA might provide accounting and tax services or aid in appraising the value of a private estate, a small business, or even a large corporation. Business valuators, like their general financial practitioner cousins, will crunch data about the assets, liabilities, and capital of a company to prepare profit and loss statements and show the financial position of a company. However, business valuators aren’t necessarily doing this so that a company can determine how much money it has to invest, as CPAs do. A business valuator is often assessing the worth of a company so that another company can decide whether or not to acquire it, or conversely, what kind of offer they will accept if another company is trying to acquire them. In 1996, business mergers and acquisitions totaled $449.4 billion, setting an all-time record. As the world hurtles toward becoming one very large corporation, business valuators are finding their services in more demand than ever, and more CPAs are deciding to specialize their talents to capitalize on these opportunities. Although there are more than 500,000 CPAs in the workforce, only some of them specialize in business valuation. Business valuators determine what a company is worth by considering its assets, competitiveness in the market place, and even how much high-profile executives contribute to the company’s profits. Valuators must also determine what a company’s tax burden will be, since that directly affects profit. There is a lot of work that goes into accurately figuring all of these numbers. Work hours can be long and stress level high. Business valuators who have their own businesses tend to work longer hours than those employed by public accounting firms (who average a 40 hour work week). While much of the numbers crunching is done at their desks, valuators tend to travel often to meet directly with their clients. Business valuators are also beginning to enter the public world on a larger basis, finding work evaluating assets such as stock options or estates in divorces and bequests. In this day and age, a high-profile divorce can earn a business valuator a fee as attractive as a corporate commission.

Paying Your Dues

A bachelor’s degree in accounting, business, or a related field is a requirement, and an MBA in finance or accounting will increase your earning power in the field. But education alone does not make one able to become a business valuator. The best opportunities for employment come to those who are first CPAs for, in most states, CPAs are the only accountants who are licensed and regulated. CPAs must obtain a certificate and license issued by a state board of accountancy. Because business valuators are not regulated by the federal government, there is a growing concern that a regulatory board be created to set up blanket professional standards and ethics. The American Institute of Certified Public Accountants (AICPA), which certifies public accountants, has developed the ABV (Accredited in Business Valuation) designation that offered its first certification exam in November 1997. The AICPA is an independent professional regulatory organization that extends accreditation to those business valuators who pass the ABV examination. As business valuation becomes even more prolific, most clients will look for business valuators, just as they look for CPAs, who are accredited both as CPAs and ABVs and uphold the professional standards of the AICPA.

Present and Future

Business valuators have never been in higher demand than they are now. Business valuators/CPAs enjoy the widest range of job opportunities among qualified accountants, and as state licensing continues to become harder to attain, options will continue to flourish for those who make the grade. Business valuators with higher levels of education will have the edge over less educated competitors, and computer skills are beginning to play more and more important roles. A broad base of computer knowledge and experience is going to be necessary as accounting software becomes better and computers continue to become more widely used in the field. Laptops are now as common as briefcases because they allow valuators to interface with their client’s mainframes.

Quality of Life

PRESENT AND FUTURE

In such a competitive market, it is hard to start out as a self-employed business valuator, and most will have to work for an accounting firm to gain experience and a client base. Capable public accountants can advance rapidly, although those with inadequate academic preparation will spend their first couple of years playing catch-up with those who have bachelor’s and master’s degrees. Those on the road to specializing in business valuation will still have to pay their dues, serving in junior accounting positions to advance to more responsible positions. Demonstrating outstanding accounting and appraisal skills on the job is necessary to moving up the ladder. Beginning business valuators will see earnings ranging from $26,000 to $30,000.

FIVE YEARS OUT

Business valuators working for accounting firms can expect their own offices and salaries pushing the $40,000 level. At this point, many business valuators choose to become self-employed, having spent their early professional years building a client base to achieve this goal.

TEN YEARS OUT

Business valuators who have been in the profession for a decade have either advanced to managerial positions or now run their own company. Those business valuators who have moved on to managerial positions or have become directors of accounting at an accounting firm can expect salaries pushing $80,000. Those who are self-employed may earn upwards of $50,000.