What credentials should a business valuator have, and how do I find one in Canada?

One credential to look for when you assess business valuation certification in Canada is the Chartered Business Valuator (CBV) designation, earned through membership of CBV Institute. The Business Development Bank of Canada (BDC) says that because of the complexity and stakes, it is helpful to hire a chartered business valuator to get an objective and realistic understanding of your company’s valuation, or to determine whether a buyer’s offer is reasonable. This guide explains what the designation requires, what standards a CBV works to, how to find one, and which questions to ask any valuator whatever letters follow their name. It does not rank individuals or firms.

What it takes to become a CBV

CBV Institute sets out the path: confirm you are eligible, complete the CBV Program of Studies, gain hands-on experience, pass the Membership Qualification Examination and apply for membership. It says that, as set out in its by-laws, you need a degree from a recognized post-secondary institution by the time you apply for membership, and it points to an alternative route for those without a degree. This tells you that a CBV has been through a defined program and a qualifying exam. It does not tell you whether the person has valued businesses in your industry, so treat the designation as a starting filter and not a full answer. CBV Institute describes the designation as one that opens doors in mergers and acquisitions, private equity, consulting, litigation support and financial reporting, so ask which of those areas the individual actually works in.

The ethics and standards behind the work

CBV Institute states that all work performed by a CBV follows the CBV Institute Code of Ethics, and that engagements within the scope of its Practice Standards must also meet strict requirements. It adds that CBVs are recognized by regulatory, judicial and tax authorities, in Canada and internationally, as experts in business valuation and related financial matters. Those are the Institute’s own statements about its members, so read them as the profession describing itself. Ask the valuator whether your engagement falls within the Practice Standards and how that affects the report you receive.

How to find a CBV

The CBV Institute website offers a Find a CBV search by specialty and location, intended to connect you with a qualified business valuator. Use the specialty filter to look for experience in your sector, and the location filter to find someone who can meet you. Your accountant or lawyer may also know valuators they have worked with; if you are choosing between an accountant and a valuator for the task, accountant vs business valuator sets out the difference.

• Which designation do you hold, and are you in good standing with its professional body?
• Have you valued businesses in my industry and of my size, and can you describe the work without naming clients?
• What is the purpose of this valuation, and does the purpose change the approach or the type of report?
• Do the Practice Standards apply to this engagement, and what will the report say about its scope and limits?
• What is the fee structure, the timeline and the information you need from me?

Why two valuators can differ

BDC notes that even different business valuators may not come up with the same figure, and that a valuator’s figure is a guideline for approaching negotiations. A credential does not remove judgment from the work. BDC sets that point beside the variety of methods that can be used and the different degrees of detail and assurance a valuation can have, so ask each valuator to show their assumptions. Our answer on whether it is normal for valuators to disagree covers what to do when estimates diverge.

Matching the valuator to the job

BDC says valuations can be done with varying levels of detail, each with a different cost and level of assurance, and that the most suitable combination depends on the purpose of the valuation and the company’s characteristics. Say at the start what you intend to use the report for, and ask the valuator to confirm in writing what it will and will not be used for. If you consider someone who holds a different credential, ask what credential they hold, which standards they follow, and who regulates them, then compare the answers with what a CBV provides. Ask for a written engagement letter that states the purpose, the date as of which value is measured, the information the valuator relied on and any limits on who may rely on the report. That puts the scope on record if the report is later shown to a lender, a buyer or a court. For the practical steps before a sale, see how to get a business valuation before selling.