Since January 2020, the IVSC have solicited feedback on the most urgent standard-setting priorities to help the valuation professions. Last week, they released the results and the long list of professional organisations, academic institutions, regulators, and valuation firms who responded.
About 50 formal responses were received as a basis for confirming an IVS gap analysis. The majority of the respondents were from organisations such as RICS or the Appraisal Institute in the US whose mandate is primarily real property valuation. Not surprisingly, the summary priorities favour automated real property valuation methods, personal property, and analysis of commercial lease transactions.
For business valuation specialists, the short, medium, and long-term priorities that emerged may be a bit dispiriting. For instance, critical topics for BV, including discounts and premia, cost of capital, early-stage businesses, goodwill, the income approach, transfer pricing, risk and material uncertainty, and IP valuation, were added as afterthoughts and do not appear directly on the priority list of IVSC projects. These topics were “reviewed,” and it was determined that many “could be incorporated into existing topics.”
Instead, the BV topics that received the highest immediate prioritisation were contingent considerations (essential), internally generated intangibles (important), negative interest rates (topical but perhaps not worthy of standards?), and workforce valuation (questionable).
As usual, even within the business valuation profession, the future work of the IVSC has a decidedly financial reporting perspective. Financial analysts who work with family and small enterprises shouldn’t expect a lot of new guidance from the IVS if this new proposed agenda is approved.
No pure BV topics ended up on the list of medium- or long-term priorities.
You can download the IVSC Proposed Agenda & Summary of Responses here.