Preview: Business Valuation Update Yearbook 2024, Part 2

The year 2023 was defined by unexpected economic events, new valuation conferences, and more. To kick off a new year, BVR has just released the Business Valuation Update Yearbook, 2024 edition, with 404 pages of the biggest events in valuation from the last year. Enjoy this coverage from the record-breaking ASA New York Fair Value Conference.

In-person capacity was sold out, and virtual attendance brought the total to about 300 for the ASA Spring Fair Value Conference in New York City May 4—a new attendance record. Topics included inflation impacts on valuation, audit targets, the new AICPA business combinations guide, ESG, PE valuations, and more. Bill Johnston (Empire Valuation Consultants) gave the welcome remarks and thanked co-sponsor Eisner Amper, in whose offices the conference was held. The first session was the popular panel session of large accounting and valuation firms that is a hallmark of this conference.

Big Four perspectives. Myron Marcinkowski (Kroll) acted as moderator for a panel that included Josh Putnam (Ernst & Young), Manish Choudhary (Deloitte), Martin Mazin (KPMG), and Adam Smith (PricewaterhouseCoopers). The panel made the following points:

  • There have been no major changes to the long-term growth rates being used—the current economic picture is seen as transitory—and the general range is 2% to 2.5% (of course, it depends on industry).
  • There is more scrutiny on management forecasts (businesses don’t know how to bake inflation into forecasts). One way is to compare performance to market participants—if all other firms are down, why is your firm up?
  • In the wake of the banking debacle, there was initial panic on the part of auditors, but that went away when the government came to the rescue. Stiffer regs will come as a result but not right away, given the pace of change by Congress.
  • The Big Four are eyeing AI (“you can’t fight machines”), but they must learn how to harness it. They don’t see its use in business valuation rising to the level that it has with real estate appraisals. 
  • The new AICPA business combination guide will not “widely change” practice in this area. Guides like this reflect best practices—they don’t establish best practices.
  • Although the Certified in Entity and Intangible Valuations (CEIV) credential will sunset, the Mandatory Performance Framework will endure (a new streamlined version is in the works), and some VPOs will incorporate it into certification training.
  • Expect audit pushback to heat up over valuations of common stock that are way different than prices realized from secondary transactions. 

Most attendees had not heard that the CEIV credential was being discontinued. The CEIV credential was a collaborative effort of the AICPA, ASA, and RICS that began in 2014, and the credential was launched in 2017. The Big Four, as well as smaller firms, embraced the program but stopped short of credentialing their people pending the resolution of several concerns, most importantly the confidentiality of client information. There was also a companion credential, the Certified in the Valuation of Financial Instruments (CVFI), which apparently will also be discontinued. 

Make sure that you are up to date on all the most important valuation events from 2023 with this must-read book. Learn more about this essential read here; while you’re at it, make sure that you’re up to date on all the most impactful valuation law cases of 2023 by checking out the Business Valuation Update Yearbook, 2024 edition.