BV Megatrends: Divisive factors, and a need to support your judgments

BVWireIssue #86-4
November 18, 2009

A common thread among the “BV Megatrends 2010” responses this week is a sense of increasing fractionalization—exactly at a time when the profession needs to unify.   The lack of unity between the U.S.-based professional associations (AICPA/ASA/NACVA etc.) is still largely blamed, but now the “two tracks” situation caused by FMV vs. financial reporting work is exacerbating the situation. For example:

  • The short-term increase in confusion caused by inexperienced valuation professionals as well as the bifurcation along [FMV and fair value] tracks is going to pressure the profession to unify and will lead to changes in the long term.
  • If BV quality is to improve and if we are to prevent the same regulatory fate of the Real Estate world, we need to unify into one entity so that we will be taken seriously by the [outside authorities]. As of now we are a splintered group focusing on who is getting the membership revenue and who has the power to control.
  • The BV dabbler will always exist in CPA firms, because they are unwilling to give up the incremental revenues. There will be an increasing divergence between practitioners working in multi-disciplinary firms, serving CPA/accounting clients, and those in a niche-focused firm serving more sophisticated needs.
  • Think of the evolution of the semiconductor chip—from a scientific marvel to an inexpensive commodity. That’s our future…

“More science, less art.”  The need for unification was supplemented by a second major trend toward increased dependence on empirical, quantitative data over qualitative.  While one respondent commented that “we’re fooling ourselves if we think valuations are any more accurate just because we run them through extra databases analyses,” every one recognizes that unsupported conclusions will inevitably draw fire at some point.  BV will always require judgment, but those judgments “can no longer come out of thin air,” said another.

Will BV ever become unified? Will the dabbler ever disappear? Add your voice to the continuing discussion; participate in the short, three-question BVMegatrends 2010 survey by clicking here.

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