Measuring the fair value of a business combinations a market for BV practitioners

BVWireIssue #98-2
November 10, 2010

Mark Edwards (Grant Thornton) and Mark Zyla (Acquitas) outlined the groundwork to perform fair value measurements during the “Fair Value Measurements Case Study: Introduction to Fair Value in Business Combinations” session last Sunday at the AICPA National BV conference.  Acquirers obviously hire appraisers to value the entity and/or specific assets, Edwards said, but, in addition, the audit team often hires valuation practitioners to test management’s fair market value in areas such as mathematical computations, methods and assumptions, and the team’s reasonableness of FMV conclusions.

Edwards gave the audience some hints “from someone who reviews reports during the audit process.” One point he made was the importance for the valuation analyst to call the reviewer. “It is a comforting call for both the auditor and preparer because the process will be less contentious,” he says.  A member of the audience addressed the matter of independence on such a call.  “Independence is important on audit side,” Edwards replied. “As the auditor I won’t tell you what to do, but if I hear something that concerns me I might bring it up. But the call is about the basics. I won’t tell you what discount rate to use, for example.”

Please let us know if you have any comments about this article or enhancements you would like to see.