“As a maturing industry, valuation services have become increasingly commoditized,” observes Kevin Yeanoplos (Brueggeman and Johnson Yeanoplos PC). “As more people have considered the profession as a career choice, there has been continued downward pressure on fees. At times I’ve wondered if we will ultimately be paying the clients for the chance to do the work,” he tells BVWire.
Rod Burkert (Burkert Valuation Advisors LLC) weighs in on the fee issue: “I believe fee compression will continue to be a concern, especially for practitioners who don't differentiate themselves by specializing in a niche and whose deliverable is ‘just’ a report.” BVWire notes that Burkert is a co-developer of the Practice Builder Academy, which is designed to help BV practitioners attract more work.
Other developments affecting fees are changes in GAAP for private companies that have also changed the need for fair value work, according to Yeanoplos. “As a result, the pool of companies requiring valuation of intangibles has diminished, putting the brakes on this area somewhat as an area of practice growth.” He also points out that, because of fundamental economic changes over the past six years, “more divorce attorneys are attempting to settle their cases without having a formal valuation done, thereby reducing overall fees.” He points out that valuation experts “have been forced to consider innovative ways to provide value to clients, such as strategic planning.”
Another way BV experts can provide value to clients is to help business owners understand value and help them see how they can tap into that value. “Interest in the BV arena has been keen on this topic, since it provides a different way of talking to business owners and a means of enhancing the relevance of what we do in the private wealth planning process,” says Z. Christopher Mercer (Mercer Capital). Mercer is the author of a new book, Unlocking Private Company Wealth, which is designed to help you help business owners manage the wealth they create in their private business and understand how to talk to them in this regard.
For more comments, see the February 4 issue of BVWire (free registration required).