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It's Amazing What CPAs Can Do

Valuation Is an Old Practice but a New Specialty

Martin J. Lieberman, CPA/ABV, ASA

Ihad been practicing accounting, putting numbers into boxes for many years, when two questions occurred to me: What are my professional goals? What benefit am I providing to my clients? The answers came back to me as: producing a product I am proud of while earning a good living, and assisting clients' compliance with generally accepted accounting principles while providing users of financial statements with some assurance of reliability. That wasn't enough. I felt there was more I could give and get. Call it a midlife crisis, a need to break away from the ordinary. This thought process lead me to explore other areas within public accounting where my knowledge and skills could be applied differently.

Becoming a Specialist

The valuation of assets has been going on since the dawn of man. We all do it. Each time we buy something we make an estimation of its value as compared to its price. When we check our stock portfolio, we are also assessing value; because we are also estimating an anticipated benefit stream, we are performing a business valuation. CPAs have the tools to value assets better than any other professionals because we truly understand how a company works financially.

Fortunately for me, my midlife crisis came in 1996, the year the AICPA launched the accredited in business valuation (ABV) credential. At that time the AICPA also offered a 10-part course on business valuation principals and practices. I signed on, took the ABV exam, and assisted a valuation practitioner who rented space from our firm. He prepared valuations for money management firms that were considering merging, a hot area at the time. I passed the ABV exam, an exam rivaling the CPA exam in difficulty, and with that requirement met, as well as the 10-report writing requirement, I applied for and received the credential.

My next challenge was to get some assignments. As a partner in a mediumsized accounting firm, there were immediate opportunities. A referral came from an attorney-client to assist a client of his in a shareholder's dispute arbitration. The manager and 50% shareholder of the subject company took an exorbitant salary and other benefits at the expense of the other 50% shareholder. It was undisputed that the harmed shareholder would receive 50% of the value of the company—the question was that amount. I prepared a report and testified before the arbitrator. My report and testimony prevailed, and I discovered I had a heretofore unknown talent at convincing others of my professional unbiased opinion.

From this point, I had the zeal and much-needed confidence to pursue my newfound calling. I networked with litigation, bankruptcy, and trust-and-estate attorneys. Most beneficial was networking with my partners making them aware of opportunities they were blind to. This proved to be my most valuable practice development tool.

The Value of CPA Specialists

Times have changed, and so has the world of litigation support. When I started in this business, the premier business appraisal designation was the American Institute of Appraisers' Accredited Senior Appraiser (ASA) credential. Attorneys or the courts were not yet familiar with the AICPA's ABV. So I went back to school, this time ASA's school, and graduated. I submitted the two required peer-reviewed valuation reports, and earned the ASA designation.

Many CPAs are also ASAs. Courts and attorneys have come to appreciate the value an appraiser who is also a CPA brings to the process. CPA expert witnesses might now have a higher ranking in the eyes of the court because they are CPAs first, valuation experts second. AICPA members are bound by its Code of Professional Conduct. On any engagement, all AICPA members must comply with the requirements of section 2.300.001, General Standards Rule: a. Professional Competence; b. Due Professional Care; c. Planning and Supervision; and d. Sufficient Relevant Data. Because of these rules, CPAs are held to a higher standard than non-CPAs in the performance of their professional responsibilities. No other group can boast of integrity and objectivity like a CPA can. We solely represent our opinion, giving our testimony, added credibility, and positioning ourselves as providers of untainted information that the court can use to adjudicate.

My experience as an ABV and service as an expert witness has been both challenging and rewarding. There are no standard solutions to any given valuation or litigation support assignment. No two cases are the same; thinking out of the box is routine. By any measure, my practice is not boring.

Although in some ways business valuation is a very old aspect of finance, as a professional specialty, it is still in the formation stage. This provides opportunities for interested CPAs like myself to add to the body of knowledge with new techniques and practice.

Martin J. Lieberman, CPA/ABV, ASA. A Partner of Lieberman LLP and Member of The CPA Journal Editorial Board. New York, N.Y.

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