Chartered Business Valuator (CBV)

What Is A Chartered Business Valuator (CBV)?

A Chartered Business Valuator (CBV) is a professional designation and accreditation provided to individuals who have successfully completed all the training and examination requirements.

The charter is awarded by the Chartered Business Valuator Institute in Toronto, Canada, formerly known as the Canadian Institute of Chartered Business Valuators. The CBV designation represents a deep understanding of valuation principles, techniques, and methods for producing accurate results.

It is held by only a small number of professionals in Canada and internationally; currently, there are 2,215 members. CBV professionals are held to very high and stringent standards, established by the Chartered Business Valuator Institute, and they are obliged to undergo continuous improvement and rigorous training.

The CBV designation is a recognized credential for professionals in Canada, but also internationally, who are qualified to evaluate and assign a valuation to companies, whether locally or abroad.

CBV practitioners use their knowledge and skills to provide a standardized business evaluation that is consistent with Canadian accounting standards. They evaluate the company’s financial statements, conduct an appraisal of its assets, calculate both the enterprise value and market capitalization, and forecast future cash flows.

How To Become a Chartered Business Valuator (CBV)?

The CBV qualification is available to financial professionals and is a high-profile accreditation that, once obtained, gives them a leading edge and helps differentiate them in the marketplace.

They can provide independent counsel or work in an advisory capacity. In both cases, they are required to produce detailed reports - an Advisory report if they intervene in the capacity of advisor and an Expert report if they are independent. Both reports differ from the Valuation report.  

The valuation report, depending on the requirements, level of detail, and assurance, is categorized into three groups:

• Comprehensive valuation report 
• Estimate valuation report
• Calculation valuation report

The Comprehensive valuation report is the most thorough report, which provides information and analyzes the company, its industry, the context in which it operates, and all other relevant information.

The Estimate valuation report is less detailed than the comprehensive report, yet it contains more information than the Calculation valuation report. The Calculation valuation report is produced with a minimal level of data gathering and compilation. 

All reports should be compliant with the standards and requirements of the CBV Institute. The level of detail depends on the requirements and needs of the specific client. The levels of reports produced by the CBV bear similarities with the reports issued by Chartered Public Accountants regarding financial statements.

Training for Chartered Business Valuators

Becoming a CBV requires registration on the CBV Institute online portal. Training for Chartered Business Valuators (CBVs) in Canada is administered by the Canadian Institute of Chartered Business Valuators (CICBV)

The criteria for selection are multi-layered and exhaustive, ensuring that CBVs have the necessary knowledge, skills, and experience to provide expert business valuation services, which gives the CBV an exclusive status.

The process to become a CBV involves a combination of education, examinations, and practical experience.

An individual desiring to become a member of the CBV institute and subsequently obtain the qualification must meet the following requirements described below.

Academic Qualification Requirement

The person must possess a post-secondary qualification issued by an academic institution or university in Canada or another country. An education requirement took effect on June 17, 2009. This requirement could be waived for individuals who were either: 

• Registered students before January 1, 2010, or
• Held the Canadian designation of Chartered Professional Accountant (the former Certified Management Accountant (CMA), Certified General Accountant (CGA) or Chartered Accountant (CA)), or a Chartered Financial Analyst (CFA) designation.

Program of Studies

An aspiring CBV must complete the program of studies, which takes on average two years and has three terms per year.

The program has four mandatory courses and two optional courses that students must choose from a specified list. Written examinations, in either French or English, are taken after each course. 

• The mandatory courses include Level I Introductory Business Valuation, Level II Intermediate Business Valuation, Level III Advanced Business Valuation, and Level IV Special Topics in Business Valuation. Each course must be taken in consecutive order. 
• The voluntary courses include Private Investments, Litigation Support in Business Valuation, Corporate Finance, and Valuation for Financial Reporting. The students have to choose two of these courses. 

Membership Qualification Examination (MQE)

After completing the program of studies, the student must register for the Membership Qualification Examination (MQE).

The MQE covers the material covered in all four levels of compulsory courses. The examination is held online and lasts 4 hours. Students are obligated to pay a $1,370 examination fee.

Professional Experience

In addition, the candidate is expected to have a minimum of 1,500 hours of relevant experience. The professional qualifying experience must be completed within five years following the passing of the MQE.

The length of the experience is divided into core and non-core valuation experiences, each comprising a minimum of 750 hours.

750 hours of core valuation experience

Core valuation experience includes experience in activities related to business valuation, corporate finance, private investments, and litigation support.

The reached conclusion concerns the company’s value, which includes the value of assets, shares, liabilities, or an interest in the business and generally excludes tangible assets on a stand-alone basis, or an established financial loss.

The core valuation experience can include activities such as: 

• Activities aiming at establishing value
• Activities aiming at estimating financial loss
• Activities referring to investment analyses, binding or non-binding acquisition offers,  investment term sheets
• Debt and credit analysis
• Impairment tests and purchase price allocation used for financial reporting 
• Value creation tasks where value is determined
• Undertakings in corporate finance or deal advisory(M&A) 

750 hours of non-core valuation experience

The experience also refers to business valuation, corporate finance, private investments, and litigation support; however, in this case, there is no reached conclusion. Qualifying non-core valuation tasks include but are not limited to:

• Financial modeling 
• Qualitative and quantitative research
• Due diligence 
• Transfer pricing
• Forensic and investigative accounting
• Trend analysis using financial ratios
• Investment or portfolio risk management 
• Teaching or research in the domains of business valuation, corporate finance, private investments, and litigation

Finally, upon completing the above four requirements, the student can apply for membership and obtain the CBV charter. A membership fee is required on application. The fee varies depending on the time of the year the MQE was passed and before the relevant cutoff date.

The MQE fee includes a new membership admission fee of $595 and a pro-rata of the annual membership fee.

The qualification requirements and the successful MQE completion, which requires at least a 60% pass rate, equip the valuator with all the advanced skills to succeed in the ever-evolving business industry, whether in Canada or internationally.

CBV vs. CFA

Both designations are prestigious in their own right and require time and studying commitment. 

The Chartered Financial Analyst (CFA) benefits from a wider international reputation. At the same time, the CBV designation is primarily known in the Canadian market, although there are individuals across the globe who have obtained the qualification. 

The CFA qualification provides a broader understanding of the financial industry with sufficient and extensive knowledge and skillset to work in portfolio and wealth management, credit analysis, risk management, investment strategy, and consulting, among others.

The CBV charter holders possess a more in-depth knowledge of valuations and tax-related topics, which can be particularly welcome for those who aim to work in valuations. However, the CBV designation is a more niche qualification than the CFA charter. 

Study Commitment 

Both qualifications require a time commitment for studying and professional experience. On average, 100-125 hours are required to complete one of the CBV courses. However, the hours suggested for the completion of each level of the CFA exams is almost triple at 300 hours.

The time commitment may vary depending on the individual, but it becomes clear that the CFA designation is more time-consuming.

Furthermore, the CFA and the CBV qualifications require relevant work experience. The difference in the work experience between the two is significant.

Work Experience Requirement 

The CFA charter demands that 4,000 hours be completed within a minimum of 36 months before, during, and after registration for the CFA program. Work experience is also required as a pre-registration condition for the CFA studies.

In comparison, the CVB designation makes 1,500 hours of relevant work experience compulsory for its candidates.

To sum up, the CFA examination and qualification demands more of its candidates and enjoys a worldwide reputation. The CBV, on the other hand, provides students with more specific knowledge and is more prominent in Canada compared to the rest of the world.

CBV vs. CPA

Sceptic Ape: 

"I would say that CBV is quite niche, and a ton of people taking up the designation have a CPA or are folks who want to work specifically in valuations."

The holders of Chartered Public Accountant qualification are exempt from the Chartered Business Valuators level I course provided that they complete the online ethics and CBV Institute Practice Standards quiz.

In addition, individuals who complete the two-part Valuation for Financial Reporting (VFR) certificate, offered by both CPA Canada and the CBV Institute, are exempt from the CBV Institute’s Valuation for Financial Reporting voluntary course.

The CPA charter is recognized internationally, and through professional partnerships, while the CBV qualification is mostly only known in Canada.

Academic Requirement

Like the CBV, the CPA accreditation demands time commitment and work experience. The candidates desiring to obtain the license must complete 150 college credits, including 30 credits in accounting and 24 credits in business administration. There are three ways to meet the requirement for 150 semester hours:

• Complete an undergraduate accounting degree and a master’s degree at the same school or a different one.
• Obtain an undergraduate degree in a discipline different from accounting followed by a master’s in accounting or an MBA with an accounting specialty.
• Register in a five-year accounting school or program that leads to a master’s degree in accounting.

Professional Experience

Aspiring CPAs must also have relevant work experience of at least 12 months or 2,000 hours. The length of the work experience may vary according to the jurisdiction.

The Chartered Public Accountant qualification takes the longest to complete - about seven years - relative to the CBV and the CFA designations.

The CPA examination structure is composed of four sections - regulation (REG), financial accounting and reporting (FAR), auditing and attestation (AUD), and business environment and concepts (BEC), each requiring 4 hours.

Each qualification - CBV, CPA, and CFA - has its demands and benefits and will be suitable depending on the personal and career aspirations of the individual.

An increasingly important aspect of the CBV role is the involvement in litigation and court proceedings regarding financial loss and business value cases.

Reports issued by CBVs are accepted and held in high regard by legal authorities, especially courts in Canada, and they have been prioritized over reports presented by other financial professionals.

Chartered Business Valuator Salary

The CBV salary is dependent on the experience and skills of the individual. As a general guideline, Chartered Business Valuators with at least five years of experience can earn between $60,000 and $120,000 per year. The bonus of a CBV equals approximately 4% of the base salary.

Chartered Business Valuator Career Path

CBV professionals have a range of career paths to choose from. In addition, the CBV designation is the only professional designation offered in Canada with a focus on financial valuation, which means you will have many options available to you.

Qualified CBV professionals can have a pool of career options that include both litigation and non-litigation roles. For example, a lawyer can hire a CBV, where, depending on the circumstances, they can act as an independent counsel or an advisor.

However, the CBV handles solely financial matters - from tax resolutions in a divorce to business valuations, shareholder disputes, and beyond - and doesn’t provide legal advice.

An accredited valuator can consider non-litigation professional development in fields such as:

• Mergers, acquisitions, and divestitures
• Financial reporting
• Tax matters
• Management buyouts and reorganizations
• Risk management 
• ESG

In addition to the technical skills associated with valuation, including financial modeling and analysis, business valuation and methodology, and business management and administration, the CBV should also have excellent interpersonal skills.

These skills include but are not limited to team collaboration, management and leadership abilities, senior stakeholder management, and excellent communication and presentation skills.