Business Valuation Resources (BVR) recently surveyed more than 160 business valuation, forensic, and litigation support (BVFLS) firms on best practices in financial management, marketing, human resources, compensation, and professional ownership and standards. With data on more than 330 owners/partners and over 1,200 professional staff, the wealth of information that comprises our new guide makes it the largest and most thorough analysis of BVFLS firms.
In this blog post, we highlight some of the key takeaways from the survey that every professional practicing in these areas should be aware of. To see more detailed information, be sure to check out the complete BVR Firm Economics and Best Practices Guide.
BVFLS firms are growing
Owners of BVFLS firms seemed to be optimistic in the 2019 guide (“2018 survey”). Six out of 10 firms grew in the last fiscal year, and over three out of five firms expected to grow in 2018. Overall, the number of new practices offering BVFLS services peaked from 1996 to 2010, but nearly a quarter of our respondents started new practices after 2010, as shown in the exhibit below.
Fastest growing specialties
Transactional engagements topped the list of the fastest growing specialty area in the 2018 survey, followed by litigation support and damages/lost profits. Divorce work, which was named as the fastest growing specialty segment in the 2016 survey, was named as the fourth fastest growing segment in the 2018 survey. The rise in the M&A/buy-sell specialty area may be evidence of the reported “boom” in business transfers expected as baby boomers start to exit their enterprises.
Top states for BVFLS offices
Respondents of the recent survey came from 40 states (Arkansas, Delaware, Hawaii, Maine, Michigan, New Mexico, Oklahoma, Rhode Island, Wisconsin, and Wyoming are not represented), five Canadian provinces, and 15 international non-Canadian countries, giving a wide representation from all regions. Of these, the top 10 states for BVFLS offices in descending order from most popular are:
- Illinois, Pennsylvania (tied);
- New York;
- Arizona, Maryland (tied); and
Average percentage salary increase awarded in last 12 months
On average, BVFLS firms gave higher compensation increases than national norms, which have been running near 3% for the last several years. The average increase for BVFLS firms for all professional positions was 6.1%. These averages include responses from one firm that gave 40% total compensation increases. Also note that the average includes the fact that 17% of respondents reported 0% pay raises in the 2018 survey.
BVFLS billing practices and methods
Most firms bill on either fixed-fee, retainers, hourly billing, or all three, as shown in the exhibit below. Value-based billing is starting to make some slight inroads, as this method increased from 30% in the 2016 survey to nearly 35% in the 2018 survey. The typical firm offers three standard billing approaches.
Sources of new and referral BVFLS revenue
Firms with business from lawyers get over 44% of their BVFLS revenue from this source. In fact, 40% of all firms in the survey received more than half of their work from this source. Still, only 5% of firms in the entire survey database (116 firms answered this question) depend on one client group only, proving that BVFLS client development is a complicated activity. Lawyers are the top market, for sure, but no one is dependent on legal referrals alone.
We know these results provide interesting reading about the BVFLS profession, but we also hope that they lead to practice-enhancing comparisons and assistance with your business planning. The data are sorted in ways that should enhance your ability to quickly compare your own practice and highlight successes and areas for improvement.
To see more detailed information and plan for future growth of your firm, be sure to check out the complete BVR Firm Economics and Best Practices Guide for business valuation, forensic, and litigation support professionals.