In his presentation, “The Cause-and-Effect Approach to Gauging Unsystematic Risk” at the CalCPA conference last week, Warren Miller (Beckmill Research) emphasized the importance of the site visit in a valuation engagement. “Many appraisers give the on-site interview short shrift,” says Miller. “This is not a social call, folks. The site visit is your chance to connect the dots…to discover the metrics and relationships that account for the major differences between the company’s relative performance and its financial condition.” Valuation practitioners should act like Columbo during the interviews, Miller joked, such as introducing a difficult question with a self-deprecating comment. An example:
“You know, you’re probably going to think this is a really dumb question, but I need to ask it because I’m trying to understand this particular area.” And then ask the question again, using ”weasel words” (adverbs, lots of “uhhs” and “uhms”) and “weasel” facial expressions (scratch head if confused; scratch head even if not confused but the answer you just got was, well, jarring, and you’re going to repeat the question to make sure that you heard it right); and so on...Get Miller’s detailed tips for successful site visits on BVR’s Free Downloads page.