BVR’s Blake Lyman recently sat down to discuss the state of the business valuation industry with Kevin Yeanoplos and Ron Seigneur. With over two decades of experience each, Yeanoplos and Seigneur recently joined forces to form Y/S Advisory Services, a premier consulting service designed to help professionals in the business valuation space develop and grow their practices. Here’s Part I of what will be two posts recapping their discussion.
Lyman: Let’s talk about the current growth of the industry. What key trends are you seeing and how can Y/S Advisory Services can help business professionals take advantage of trend-related opportunities in what has become a very competitive marketplace?
Yeanoplos: As you look at the growth in valuation as a profession over the last 10 years, historically it's been in the top five growth areas for financial services during that time. So as a result, more and more firms that have started--or at least tried to start--a valuation division.
We don't think there have been adequate resources to help firms launch those divisions. There hasn't been somebody or a firm that would be willing to come in and really help another firm to set up a valuation department from soup to nuts. That’s the void Y/S Advisory Services hopes to fill.
Seigneur: We're here to make people look good in terms of doing valuation work. But we're not here to compete with them for that actual valuation work. Kevin and I both have active practices and we do valuation work similar to the clients we serve, but we're here more to be consultants to them as opposed to competitors. We're not here to create training programs that train people how to do valuation. We're here to help them figure out what they do with that technical competency once they learn the valuation business.
Lyman: What type of trends are you seeing in terms of specialty and niche valuation practice areas?
Seigneur: The specialty of valuation has become specialized within the specialty. There are valuation experts who specialize in family law. There are experts who know all there is to know about healthcare valuation. There are valuation specialists who just cover auto dealers. There are specialists in fair value. So, we see a need to help people to execute on those types of niche expert strategies. We can serve as a sounding board and we can help practitioners determine whether a niche focus makes sense. Similarly, we can help them determine where they want to be within the valuation space.
Yeanoplos: It was easier 20 years ago to be a CPA generalist. As the information over the past 20 years has expanded, evolved and matured, there's even more need to have that specialty expertise to really assist other practitioners.
Lyman: Over the last 20 years much has been has been made of the technical competency of appraisal professionals, often at the expense of practice development. Any thoughts on that?
Seigneur: As we've bumped around doing a lot of teaching together and writing and speaking at conferences, we've always talked about the fact that we're doing so much to evolve the competence of people actually doing the technical side of the work. But to us we've always seen a gap in what's available to help people to execute a business plan, to build a valuation practice that is robust and makes sense.
We've seen some beginnings of that and it's helped us focus on the fact that we can help firms with established practices make their practice more viable, more focused, more robust and more meaningful to them in their professions. We can also help folks who are looking to establish a practice determine how to get started, identify the kind of competencies they need to do the types of things they want to do. For example, we get calls from valuation professionals who are trying to determine whether they should add a forensic accounting emphasis to their practice and wondering how they might go about doing that.
Lyman: You are both well-known in the business valuation community, specifically for your technical expertise. Tell us a little bit more about your backgrounds and why your experience makes you well-suited to consult in the management and growth of other professional practices.
Seigneur: I am the managing partner of Seigneur Gustafson, a CPA firm in Lakewood, Colorado, just outside Denver. Our firm is a pretty traditional CPA firm. We've got about 20 employees. About 15 of those employees focus on traditional CPA work: tax compliance and attestation services. We have a team of four people that focus on valuation work, economic damages, and forensic accounting. We also do other consulting work.
I was a legal administrator for a 50-attorney Denver firm in the mid-1980s. At that firm I got my first taste of business valuation work because the firm was very involved in bank acquisition work tied to the savings and loan crisis. There were a lot of FDIC takeovers and the Resolution Trust Company at the time. As the CFO, I got more and more involved in valuation related work, doing projections for banks that were being bought and sold through the FDIC and proving up the valuation and the price being paid for those banks.
Yeanoplos: I currently practice in Tucson, Arizona as a partner in Brueggeman and Johnson Yeanoplos. I've been doing this now for close to 20 years and over that time I've been involved with a number of other practitioners. I initially began my career as a CPA because I enjoyed working with numbers. I spent the first few years of my career working at one of the Big 4. I quickly started to feel like the projects I was involved on were the same projects over and over and over. I just could not see myself doing that for the next 40 years. So, I learned about business valuation. To me valuation was like an oasis in the desert. It gave me that creative outlet. Today it's interesting because that creative outlet is one of the big reasons why we feel that there is a need for the services we provide at Y/S Advisory.
Historically, CPAs have been able to look at standards and technical guidance that are fairly specific to be able to understand how to solve particular problems. One of the reasons why the move to fair value or current value has been relatively hard for some CPAs is because it's injected much more judgment into the work that they do. And of course, judgment is something that is helped by experience. Ron and I both have a tremendous amount of experience in the valuation area, in the consulting area, financial analysis area, and that experience is absolutely vital to assist other financial professionals.
To learn more about Y/S Advisory Services through BVResources, visit: www.BVResources.com/YSAdvisory.