ABCs of Appraiser Credentials

Not all Appraisal Designations are Created Equal.

While professional appraisal credentials in real estate appraisal have been around for decades, professional designation in Businesses Appraisal is a more recent phenomenon. It’s been less than thirty years since the Institute of Business Appraisers (IBA) was formed and since the American Society of Appraisers (ASA) officially recognized business valuation as a separate appraisal discipline. Since that time a number of other organizations, likely seeking to capitalize on the emergence of BV as a fee-producing technical specialty and hoping to siphon off some of the fee revenues to the troubled Public Accounting profession, have jumped into the alphabet soup of professional designations.

Credibility Counts. It’s certainly true that not all credentialed appraisers are equally qualified, and in a given case the lesser credentialed appraiser can sometimes do as good a job as the one holding the more senior designation. But in a world of experts, high quality credentials mean high quality credibility, and in every case in every trial, credibility carries the day. Further, it’s often the quality of the credentials that gets the case settled and avoids the costly trial.

CPAs Suddenly Become Appraisers. Most recently into the melee with the ASA and IBA are the National Association of Certified Business Analysts (NACVA) and the American Society of Certified Public Accountants (AICPA), both of which created alphabetic monikers (CVA & ABV) for their members.

Though there is certainly a lot of turf guarding in the industry, it’s fair to say that the two most senior credentials, and the most difficult to obtain are those awarded by the American Society of Appraisers and the Institute of Business Appraisers, Accredited Senior Appraiser (ASA) and Certified Business Appraiser (CBA), respectively. But these guys are rare commodities: only about 400 individuals are credentialed as CBAs, and about 700 as ASAs, so they are not always easy to find.

Experience Requirements Prove-up Skills. Both the American Society of Appraisers and the Institute of Business Appraisers are unique in that they require that designation applicants have a minimum amount of actual hands-on business appraisal experience, and require that applicants submit a sample of their actual work product to a committee of reviewers for approval. Both the ASA and the IBA require each successful applicant must have completed 5 years of full-time practice exclusively in the performance of business appraisals. By contrast, NACVA has no requirement that the applicant have ever performed an actual appraisal for a client, and the AICPA only requires that the applicant have “involvement” in ten business appraisals.

Some Written Exams are Easier. Both of the professional appraisal societies and the other credentialing entities require that applicants pass a written examination, though the rigor of the examination is likely not equivalent among the organizations. The IBA written examination is a four-hour objective and case study test, proctored by the IBA several times throughout the year.

The ASA conducts its proctored examination a little different allowing any applicant who meets all of the requirements to sit for the open group examination, or to take and pass four examinations given at the end of their four main Appraisal Principles courses. The pass rate for these exams has been running about 50%. The AICPA recently developed a written examination for its accountant members - applicants must be CPAs to take the examination - the AICPA doesn’t announce what the pass rate is for its examination. The process used by NACVA is different from the rest: its examination is an open-book take-home, mail-in exam and case study. We’re not aware of any applicant who has failed the NACVA take-home examination.

Summary. In a world where the nature of the work product is so technical, the imprimatur of credibility is the mantle of success. Your clients’ cases are best placed in the hands of the most skilled and credentialed business appraiser available — those recognized as Certified Business Appraiser (CBA) and Accredited Senior Appraiser (ASA). Both the IBA and ASA publish directories of their credentialed members and maintain websites to assist in locating qualified business appraisers. Both Mr. Eggers and Mr. Laversin are credentialed CBA & ASA appraisers. They are two of what is likely less than 100 U.S. appraisers who hold both of these advanced professional designations, as well as CPAs.