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:
The International Association of Certified Valuation Specialists