Why chartered valuation?

Why chartered valuation?

The greater the risk of a challenge to a valuation conclusion, the greater the need for a recognized objective expert.

A CBV designation also provides prima facie credibility in the eyes of the courts (e.g. if there’s a challenge to a valuation conclusion).

Real Estate Management PCVC

Many aspects of the valuation process are more complex than is readily apparent. For example:

  • Maintainable earnings, on which many valuations are based, are not as simple as the average of the last – say – 3 years;
  • Every business has its own unique exposures to risk and all of these inform the valuator about the most suitable multiples or yields to apply in the valuation calculation;
  • Many businesses carry assets that are redundant to their needs and can have a significant impact on fair market value;
  • The rights attaching to different share classes will impact their value.

CBV’s are members of the Canadian Institute of Chartered Business Valuators. Admission to the Institute requires significant further education (at least 2 years of part time study), the successful completion of an entrance examination and 1,500 hours of monitored practical experience. CBV’s are required to adhere to practice standards and a code of ethics published by the CICBV. The CICBV also requires post qualification continuing professional development. The CICBV maintains a public list of members in a good standing (see cicbv.ca).

As specialists, most CBV’s subscribe to expensive research material, providing them with up-to-date factual information to guide the valuation process.

CBV’s will usually discuss with their clients the most appropriate level of valuation report to be provided. CICBV practice standards provide for 3 levels of report: a calculation valuation report, and estimate valuation report, and a comprehensive valuation report. The difference between these reports largely lies in the amount of corroboration undertaken by the valuator, with a calculation report requiring minimal corroboration and, at the other end of the scale, a comprehensive report being akin to an audit.

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