tikfed

slyle31 Wrote:
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> Just wondering if any AF'ers are in Business
> Valuation on the appraisal / advising side. I was
> hoping to get some thoughts or experiences in the
> field, pros / cons, and if you were doing business
> valuation / valuation services in the past and no
> longer are, what field / function did you transfer
> into.
>
> Thanks for your feedback.

I would say you have gotten some pretty good feedback on the issue, and you can see there are quite a number of people on the boards in the field. Also, you will notice quite a growing number of charterholders in the field as you look on linkedin and various other sources. In my opinion, many of the charterholders are probably looking at the CFA as a way to transition out of BV, and not so much progress their career in BV. Please note I said many, and not "all", as I would assume there would be plenty in the later category.

I wanted to discuss something you wrote in your follow-up post. Although age is just a number, and you are never too old to try new things if you want (and all the other things people say), I will have to say while this is not untrue, it is the glass half full approach of looking at things. Age does make the landscape more challenging for a variety of reasons.
So, with 10 years of corporate finance under your belt, I would look at a move into business valuation as a long term move, and not a stepping stone. With 10 years of corporate finance experience, you can probably always return to corp finance if BV doesn't pan out or runs its course, etc, but in general, BV isn't a good stepping stone.

Generally speaking, BV is more of a career choice and does not possess good exit opportunities. The reason being it's a very highly specialized skill set, and while many general financial tools can be applied elsewhere, the specific applications of the skillset are not transferable. Also, the perceptions of the field will barr you from entry into the fields you most likely would try to strive for (i.e. finance). Most people in finance do not know or care what business valuation is, and if you tried to explain it to them, you will automatically be associated with compliance (because after all, thats what BV is), accounting, product control (most banks have "valuations" in their product control areas). For what it's worth, my gut feeling is you would enjoy BV more as it is a client facing position than a product control or "valuations" type role at a bank. Separately, some PE firms have valuations people to assist with their reporting requirements, but in many cases, controllers and accountants act in a dual capacity and take care of that. Also, as valuations is non-revenue generating and compliance oriented, the pay and respect will probably not be great, as opposed to being a revenue generating, client service professional at a BV firm.

Somebody in this thread mentioned exit ops as not being IB/PE and more of ER and AM, and I would tend to respectfully disagree with that. Although the chance of getting into any of these is relatively low, you may have a better shot at a banking or transaction based role if you are doing more purchase price allocation work. The exception is moving over to an equity research role if you have a particular focus and expertise in an industry, and not just a valuation generalist. I would go a step further as saying that the industry would probably have to be more specialized, such as energy, pharma, or financial institutons, and not something like broadline retail or restaurants.

Regarding the actual work -

The work can be somewhat fun and interesting, and it's not a bad gig. You get to wear many hats (depending on your shop) from marketing and presenting and educating, to excel guru doing modeling and analysis, to literary genius wriitng remarkable reports.

In actuality though, the modeling is different because for the most part, you aren't actually forecasting anything, you are kind of regurgitating management projects. Well, thats for finanical reporting or tax valuation. Economic damages/IP Stuff is a whole different ballgame. Writing the report is usually just a formality and it's usually all backward looking.

Also, most processees for certain types of valuations are generally dictated by accounting firm preferences, IRS regs, or certain court rulings, depending on the field of valuation you enter. So there usually isn't a whole lot of room for creativity or new financial theory, although I find valuation to be very academic, in nature, and you will constatly read papers, or here about debates into finanical theory, but there are always going to be clashes between the accounting school and the finance school. But it is a field where you can do side work to fuel your intellectual curiousity by writing papers and the like, but mostly for your work, just stick to the straight and narrow.

The cool thing though is traveling. You really get to see many different types of businesses, plants, operations and stuff, which is cool. It's laid back travel, not wall street travel, so you have a bit of time to enjoy yourself. Also there are many industry conferences, classes and stuff, which you get to try your hand and picking up a fresh young thing and take her to daddy's suite. But I digress.

As far as pay, it's generally pretty good, meaning you can make a nice living doing valuations. Depending on Big 4, regional accounting firm, or independent valuation shop, there are alot of opportunities in the field, especially with the increasingly stringent regulatory environment. However, this brings up a heirechy/ego issue. In valuation, Auditors are the Lions, audit review valuation teams are the lionesses (they are the auiditors @#$%&), and you are like a pet bunny rabbit. Sorry I don't have a good metaphor as to why you are a bunny, but you just are. You pander to accountants (the lions here, but it in real life they are the guys in the stands with the scorecards writing down every base hit, stolen base etc where the players (wall street, p/e firms etc, corporations) are playing the game), you even kind of pander to the valuation review people..then you have to kiss your client's backsides, which sure you do on the sell-side also but here your clients can be small time lawyers, accountants, mom& pop shops) so you really have to eat some humble pie here.

All that said, besides from the good living, you can make a very good living if you are truly talented and have the credentials to become an expert witness that can command a very high fee. There are not many of them, there is a huge barrier to entry, as you need credentials, and tremendous experience, but the few people who dominate that area probably have some high quality suits on when they get into their luxury cars.

The negatives are the work can get repetitive doing the same thing, and it can become unfullfilling knowing you aren't really doing anything except for an accounting function, but if that doesnt matter to you, you just want a nice career, by all means, BV may be the place to go!

As far as getting into BV, i think you have a few different types of people:

1) Accountants who want to do something more "finance" They look at is as a step-up
2) Fresh out of school finance people that don't land banking/research/ PE/ HF/consulting (people don't turn down those offers to take valuation jobs). They look at BV as temporary, and a stepping stone -usually pursue CFA to help that stone
3) Finance people, like investment bankers who were pushed out of the field, dont like the hours, had enough, want to go into business for themselves, etc. They generally look at this as a work/life move and are fine with sacrificing money/prestige

Sure, there are people who land there from all walks of life, but hose are a few of the bigger buckets.

So to summarize, and please contact me @hotmail.com (no I don't really use hotmail that much)

1) BV is a good career that generally has stability, a nice living, and decent exposure to finance

2) It can however become a little repetitive, but there is room for intellectual curiousity on the side by exploring financial/valuation theory, but for work purposes, it's probably best to stick to accepted procedures for executing valuation tasks. Also, it may be unfulfilling as you aren't really adding to the investment process, but generally just doing the accounting function of keeping score.

3) It's a career move, as the exit opportunities are generally not good.

4) Expanding on #2, with many industry conferences, there really is so much room to learn alot and explore your intellectual curiousities. However, in practice, it will not be used much.

5) Wear a half decent suit, and you will instantly be the most stylish guy in the shop, and thereby have a good shot as getting some young tail. Just DO NOT, whatever utter the words "Im an appraiser"

6) Oh, side note. Do not, please, put "Investment Banking" as your industry on Linked In if you work in BV. Tons of people do it and it's such a joke.


Good luck dude!