Last week’s BVWire revealed that a fledgling valuation professional organization (VPO) is taking shape in Hong Kong and will seek approval from regulators. In our talks with several valuation firms, we learned about some other aspects of local BV:
- There is concern in the profession over the quality of valuation work here. There are no official local standards and no formal oversight of BV work. Regulators had put some pressure on the profession several years ago, but that has died down.
- Since there is no VPO and “anybody can do it,” it’s difficult to get a real handle on the number of valuers in Hong Kong. Estimates range from 200 to 500.
- The most prevalent and respected credential here for BV experts is the CFA, who get BV-specific training. There is also a CPA designation from a Hong Kong group. There are some ASA members here, but it’s tough to recruit new members as there’s no strong incentive to join.
- Appraisers use the typical data: Duff & Phelps, Bloomberg, Cap IQ. No data are available on private companies here, but some appraisers feel they can use U.S. data and adjust it.
- The valuation books on the shelf are the same as you’d see in the U.S. The English language is prevalent here, so translation is not an issue. Hong Kong appraisers look to the U.S. for methodology if they don’t know how to handle a particular issue.
- Credentials are not listed on business cards here—it’s considered “boastful.” More important is relationship with clients.
- Fair value engagements are common, such as purchase price allocations and impairments.
- Not much litigation work is done here related to valuation. Shareholder disputes are few as many firms—including the listed firms—are family owned without wide ownership. There is not much damages work, we’re told. There is no requirement for fairness opinions here, but with large deals an independent valuation is needed.
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