Although there are no standard requirements for a business valuation report or who can legally provide a valuation report, company owners should ensure the professional they hire has one of the following professional designation – CPA, CBV, ABV, or CFA.
For U.S., ABV or Accredited Business Valuator are awarded to CPAs or valuation professionals whom have passed a list of courses and an exam and fulfilled a number of valuation hours. For Canada, CBV designation is the most recognized credential for professional business valuators in the Country. CFA is the gold standard for the financial industry and CFA charterholders might or might not be specialized in private company valuation but the designation warrants a high level of expertise and professionalism in the industry.
For Canada, the history of professional valuation goes back to 40 years ago since the 1971 tax reform, where Canada Revenue Agency (CRA) required valuation for income tax purposes for gift and estate tax, capital gains tax purposes. CICBV were designed to fulfill these formal valuation needs. Ontario Securities Commission (OSC) later issued valuation-related policy and the standard for business valuation reports. As a result, CBV by CICBV was introduced.
For businesses with over 500k revenues, owners should seriously consider having a valuator report done by a professional with one or more of the above designations. Business buyers and investors typically have sufficient resources and knowledge about the valuation metrics and will investigate the facts, reasonableness, legitimacy of the business valuation. A poorly prepared valuation report will not only have bad representation of your business reputation and lower the true value of the exit value but also invite future expensive law suits.
Business Valuation Report