Accredited in Business Valuation (ABV)

What is Accredited in Business Valuation (ABV)?

Accredited in Business Valuation (ABV) is a professional designation given to Certified Public Accountants (CPAs) who specialize in assessing the value of businesses.

The American Institute of Certified Public Accountants (AICPA) is in charge of regulating the ABV certification process. 

Candidates for this certification must complete the following:

1. Submit an application
2. Pass an exam
3. Meet the minimal education and experience requirements
4. Pay a credential fee. 

The annual cost of keeping an ABV differs based on the type of membership. There are 6 types of memberships, each priced differently, that can be viewed on the AICPA website.

Those who hold the certification must also fulfill requirements for lifelong learning and minimal work experience to maintain their ABV credentials. 

Candidates who gain this credential are granted the privilege to use ABV to enhance their professional prospects.

The ABV Exam has two parts and is administered by computer. To get ABV certified, both parts must be passed in 12 months (calculated from the date of the first part's passing).

Each test component has a three-hour-and-fifteen-minute time limit, with a fifteen-minute break. There are 90 multiple-choice questions in each module of the exam, of which twelve involve case studies. 

These inquiries are designed to gauge an applicant's analytical skills and ability to apply valuation theory and technique.

How Accredited in Business Valuation Works

The designation "Accredited in Business Valuation" (ABV) is provided to accountants who have a deep understanding of applying valuation theory and have knowledge of the associated professional standards. 

It is a credential obtained by taking and passing a two-part test and gaining appropriate job experience. 

People with the ABV designation are typically Certified Public Accountants (CPAs), specializing in determining a business's worth through various types of analysis.

Non-CPA members must have a minimum of 1,500 hours of valuation experience. However, for CPA members, only 150  are required.  

Although the qualifications are stringent, they support the designation's high caliber and let employers know that a professional is dedicated to the field of valuation.

CPAs with exceptional business valuation knowledge, skills, and experience are awarded the well-recognized ABV accreditation. 

Suppose someone is successful in earning an ABV certification. It will allow them to work for companies that deal with business value more frequently, like consulting and company valuation firms. The areas covered by the ABV credential study program include:

• The fundamental business valuation process 
• Valuation analysis 
• Professional standards 
• Qualitative and quantitative analyses
• Financial reporting and lawsuits

The ABV designation might strategically assist some accountants in developing their careers or positioning themselves for various employment opportunities. 

For instance, having this certification may show clients, if the position is client-facing, that they are knowledgeable and dependable in business valuation.

Likewise, appropriately appraising a possible acquisition target is extremely helpful during merger or acquisition deals. 

The ABV certification might help the applicant stand out from other accountants applying to big accounting firms, investment banks, or major tech companies.

Someone who qualifies may also be able to better examine and audit their own business, grading its results in comparison to rivals or potential buyers’ offers.

Accredited in Business Valuation Requirements

Candidates for an ABV certificate must fulfill several prerequisites, including owning a current state-issued CPA license or certification. 

An ABV test completed and passed is a must, however, there can be certain exceptions. For example, these criteria exempt a candidate who is:

• Accredited senior appraiser member of the American Society of Appraisers (ASA)
• Bearer of an American Society of Appraisers credential
• Chartered Business Valuator and Certified Financial Actuary
• Credential holder of the Canadian Institute of Chartered Business Valuators

Additionally, there are particular experience and education requirements that candidates must fulfill to obtain ABV, including the following: 

1. Business experience 

A candidate for this certification must have completed a minimum of 150 hours of business valuation experience during the last five years of employment. 

Candidates can apply a maximum of 15 experience hours from the completion of the AICPA Forensic and Valuation Services Conference's practical company valuation case study track.

2. Educational background 

A 75-hour valuation-related continuing professional development program is required (CPD). The 75 hours must be accumulated five years before the ABV application date.

A candidate who possesses these qualifications gets to take the exam. Computers are used to administer the ABV Exam electronically. 

The Exam is divided into two pieces. The second section must be completed within a year after the first section is passed. 

The candidates are given 3 hours and 15 minutes to complete each part of the ABV credential exam. There is also a 15-minute break. There are 90 multiple-choice questions in each module. 

There are 12 case-study-related questions with multiple-choice responses. 

Candidate requirements include case study analysis and the development of a potential best solution for each case study.

Typically, the questions are asked to gauge a candidate's analytical and practical skills in valuation theory and practice.

It should be noted that, while the candidates take the tests on a computer, their use must adhere to the International Glossary of Business Valuation Terms for credibility reasons.

Career opportunities from someone with ABV credentials

The ABV certification is a crucial exam for CPAs who provide valuation services. The ABV accreditation will help finance professionals advance their careers and broaden their knowledge as CPA valuation providers. 

There are several reasons a CPA should get ABV certification. Notably, it aids one's development as an authority in both domains. 

Additionally, it will increase credibility within the company they work for and with their present and potential clients. In other words, the ABv accreditation increases clients' trust that, if recruited, the person will be able to offer credible outcomes.

CPAs will also gain a reputation as sought-after providers of valuations. Their business valuation skills will be considered superlative if they obtain an ABV certification. In addition, they will be recognized as reliable, experienced valuation professionals.

The certificate increases their chances of receiving referrals from other professionals, business partners, lawyers, and clients.

It provides prospects for a solid income. A person will have a decent possibility of getting a well-paying valuation position or contract from private businesses, such as banks, mortgage lenders, consulting firms, and investment brokerages if they possess ABV qualifications.

Additionally, it paves the way for self-employment, allowing certified CPAs to work directly on highly-lucrative projects.

The Different Business Valuation Bodies 

There are neither formal college degrees nor licensing requirements in company valuation. 

As a result, over the past 30 years, the industry has progressively understood the need to accredit practitioners to denote levels of experience and expertise. 

Business appraisers are now certified and accredited by several national organizations. Today, the majority of analysts concur that there are five central certification bodies in the U.S.:

• American Society of Appraisers (ASA): Accredited Senior Appraiser (ASA) 
• CFA Institute (CFAI): Chartered Financial Analyst (CFA) 
• Institute of Business Appraisers (IBA): Certified Business Appraiser (CBA) 
• American Institute of Certified Public Accountants (AICPA): Accredited In Business Valuation (ABV) 
• National Association of Certified Valuation Analysts (NACVA): Certified Valuation Analyst (CVA)

1. The American Society of Appraisers (ASA)

The first organization to accredit appraisers was the American Society of Appraisers (ASA), founded in 1936. Real estate, antique, art, company, and other forms of appraisers make up the multidisciplinary ASA. 

2. The CFA Institute (CFAI)

The Financial Analysts Federation (FAF), founded in 1947, is the ancestor of the CFA Institute, a global network of financial experts. 

The FAF's leadership created an independent organization in 1959 called the Institute of Chartered Financial Analysts (ICFA) to administer the CFA certification program. 

The ICFA then conducted the first CFA tests in 1963. The Association for Investment Management and Research (AIMR) was later formed by the FAF and ICFA merger. The AIMR became the CFA Institute in 2004.

3. The Institute of Business Appraisers (IBA)

The Institute of Business Appraisers (IBA), founded in 1978, was the first group devoted entirely to business appraisers. Currently, the IBA has roughly 1,750 members and 400 certified business appraisers (CBA).

Due to its strict requirements, the CBA distinction is a highly acknowledged accreditation. Candidates must have 10,000 hours of operational experience or have completed 90 hours of appraisal education. 

Candidates must also complete a proctored six-hour written test and turn in two evaluation reports for peer approval. 

The IBA claims that about 75% of applicants pass the exam and that only a third of submitted demonstration reports are accepted without modification. In addition, every two years, CBAs must complete 24 hours of continuing education coursework. 

4. The American Institute of Certified Public Accountants (AICPA)

The AICPA, a group of CPAs, expanded into business valuation in 1997 due to an increase in the number of its members performing appraisals. 

There are about 2,780 professionals with ABV status in the United States. ABVs must possess a CPA license, demonstrate 1,500 hours of significant valuation expertise or at least six company valuation engagements, and pass a proctored one-day exam. 

5. The National Association of Certified Valuation Analysts (NACVA)

NACVA is one of the newest organizations for business appraisers. NACVA was founded in 1991 and has about 5,000 certified valuation analysts (CVAs). 

Only CPAs are eligible for CVA designation. No prior experience is necessary for applicants, but they must pass a two-part exam. 

The first exam is a five-hour proctored test, and the second is a 40–60 hour take-home test that requires you to write a report on a given business's value. 

The CVA has the highest pass/fail ratio of the four accreditations mentioned here, with roughly 96 percent passing the proctored exam and 86 percent passing the case study.

Members who want to keep their CVA designation must complete continuing education requirements, publish a paper, teach a business valuation course, or provide documentation of ongoing experience.

Researched and authored by Anja Corbolokovic | Linkedin 

Reviewed and edited by Justin Prager-Shulga | LinkedIn

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