B-Val and Acceptable Work Experience

From past postings on this board I’ve noticed some people with business valuation work experience have been approved by CFAI while others have not. After reading the CFAI Membership Instructions and Sponsor Forms I see no reason why business valuation experience would not be accepted. The Sponsors Forms define the Investment Decision Making Process as “the professional practice of financial analysis, investment management, security analysis, or similar activities”. Since this definition uses “or” you do not need to be involved in investment management to qualify. The business valuation profession does involve financial analysis and security analysis so it should qualify under this definition. Under the job titles that are most commonly accepted as acceptable work experience they include “Valuators of Closely Held Business”. The Membership Instructions define this occupation as those who “value business/company/corporation where stock is thinly traded (or privately held) and for which the market offers limited buyers/sellers. Analyze financial statements, accounting methods, capital budget projects, acquisition and asset sales”. This definition fits business valuation perfectly. So based on this why would anyone with business valuation experience have their experience rejected? For those of you that have had business valuation work experience rejected, did you get approval upon further clarification? If you had no luck did you consider legal action?

I applied for affiliate membership and my business valuation experience was accepted. I had 1 year and 1 month experience doing this when I applied few weeks back. I dont have any other experience.

How did you describe your experience to CFAI? Did you indicate the work was for financial reporting, litigation, or tax reporting purposes?

Private Company Valuations as well as Stock Valuations.

My 6 years of experience in pricing and valuation for tax purporses with a big4 was rejected by the CFAI.

georgenxd Wrote: ------------------------------------------------------- > My 6 years of experience in pricing and valuation > for tax purporses with a big4 was rejected by the > CFAI. That’s strange. I dont think/know if it matters if that I do it for Financial Reporting Purposes and you do it for Tax Purposes. Have you been valuing Private Companies or Public? May be its stricter for regular membership.

My work is used by multinationals to reduce global taxes. I don’t value the whole business, just specific assets sold in intercompany transactions for which there is not market price. I think the problem is that my work is not related to the investment decision process. I didn’t want to lie to the CFAI about that. I need some help with this. Any thoughts?

georgenxd, it doesn’t sound like you are doing business valuation work. If you were valuing the equity or whole company (debt and equity) you would meet CFAI’s definition of the investment decision making process. However, if you are doing financial analysis through analyzing financial statements, discounted cash flows, or valuation multiples you may still meet their definition (see my original post with the definition of investment decision making process).

Thanks Manny. "Analyze financial statements, accounting methods, capital budget projects, acquisition and asset sales” - That’s what I do during my day and I wrote that clearly in my work experience (WE) description. I think the person who read my WE description was looking for the magic words “investment process” and those words were not there in my descrition. Additionally, the CFAI is determined to eliminate all the accountants and auditors from the CFAI so when they see that your employer is KPMG, E&Y or PWC that makes them reject your experience. I would like to hear from any business valuator working at an accounting firm and whose WE was accepted under the new rules.

georgenxd, CFAI defines acceptable work experience as “evaluating or applying financial, economic, and/or statistcal data as part of the investment decision making process involving securities or similar investments”. It sounds like you are valueing business assets and not securities. I think this may be the reason CFAI rejected your experience. If you were with the business valuation group of a Big 4 doing equity and business enterprise valuations I think they would approve your experience. I work for the valuation group of a regional accounting firm and I’m in the process of getting my application ready to send into CFAI. From my understanding the Big 4 valuation groups and firms like Duff & Phelps encourage their staff to pursue the CFA Designation as much of their staff have educational backgrounds in finance and do not have the accounting college credts to qualify for the CPA. I used to work for Duff & Phelps (which traces its history to being part of PWC) and they wanted all their analysts and assocites working towards the CFA Designation. The CFA Designation was even more highly encouraged than the ASA designation by D&P.