New ASA standard; first in 12 years

BVWireIssue #71-4
August 27, 2008

Last week, the American Society of Appraisers (ASA) announced in their Business Valuation E-Letter that a new standard, BVS-IX Intangible Asset Valuation, was recently approved.  BVS-IX provides general guidance for the valuation of intangible assets—its Appendix A provides further guidance on the valuation of the four classes of intellectual property: patents, trademarks, copyrights, and trade secrets.  Chris Mercer, ASA, CFA (Mercer Capital, Memphis, TN), who serves as chair of the BV Standards Subcommittee, provided the BVWire with some insight:

BVS-IX Intangible Asset Valuation is a new standard—the first new standard since January 1996.  It was developed by a highly qualified subcommittee including Claire Donias, Richard Wise, Gordon Smith, Russell Parr, Robert Schweihs, Jeffrey Jones, and Timothy Cromley, Chair.  It was released for exposure and discussion prior to the new Standards Subcommittee’s appointment.  We picked up the ball and addressed comments, as appropriate.  With further guidance from the Business Valuation Committee, we were able to complete BVS-IX and it was approved at its June meeting in Minneapolis.

One of the biggest changes in the form of the standards is in BVS-I General Requirements for Developing a Business Valuation, at §II.B., subparagraphs 1-14.  In this section, all of the various defining elements of a valuation assignment found throughout the ASA Business Valuation Standards and the Uniform Standards of Professional Appraisal Practice were consolidated in one place.  My suggestion is that appropriate professionals at every firm examine their report templates in light of this list to ensure that assignments are appropriately defined, hopefully in one place in their reports.  

View the ASA Business Valuation Standards here and, per Chris’ suggestion, make sure to read §II.B on page 5.

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