Updated: Apr 23
Today's post is by Graham Antrobus (BFP, FCA, CTA, CBV, AM) of Bruce Sutherland &Co. Graham is an experienced business valuer, with particular interest in valuation of early stage companies and intangible assets. He specialises in providing valuations for businesses in a variety of industries. Graham is a Vice President of the ASA's International Virtual Chapter, he also sits on the IIBV's Educational Committee.
Business valuation is a complex field that requires a thorough understanding of accounting, finance, and economics. It involves determining the economic value of a business or company, which can be crucial for a wide range of situations such as mergers and acquisitions, raising capital, and litigation support. For many individuals, including myself, business valuation is a career path that is born out of a passion for finance, a real interest in the factors that drive the value of a business and perhaps most importantly a desire to help business owners to understand the true value of what is often their most valuable asset.
My journey into the field of business valuation was not a direct one. Similar to many practitioners in the field, I began my career in accounting at a regional firm, Wenham Major. At that time, my firm did not have a valuations department nor did we have a valuations expert working there. The firm’s partners would deal directly with the easiest valuation jobs without any input from more junior staff members. More complicated engagements were often sub-contracted out to a specialist firm of advisors called WJB Chiltern, which assisted accounting firms with complex accounting-related problems. Despite this, business valuation was always an area of interest for me.
After qualifying as a chartered accountant in 2003, I moved to a Big 4 accounting firm, PriceWaterhouseCoopers LLP, where I spent three years gaining crucial post-qualification work experience in audit. Although I was not directly involved in business valuations at this point, I continued to develop my interest in the field. However, with the birth of my first child in 2007, family time became increasingly important, and I took on work with smaller and mid-tier firms to accommodate this.
Despite these changes in focus, my passion for business valuation never faded. In 2009, I had my “big break” with what I would describe as the opportunity of a lifetime to work at Bruce Sutherland & Co (BS & Co). This was really a momentous occasion in my career; the three partners at BS & Co were all well known in the valuations field. Mr Sutherland was widely regarded as one of the UK’s founding fathers of valuation whilst Ms Nelder and Mr Bowes were known on both the lecture circuits and for their publications.
My learning curve in the world of valuations was steep, but I was eager to take on the challenge. My training at BS & Co began with an attempt at the qualifying examinations for the Chartered Institute of Taxation (CIOT). The partners at my firm were all Chartered Tax Advisers as well as business valuers and were particularly keen that I should study and get comfortable with the principles of Capital Gains Tax, Inheritance Tax and Trusts and Estates because, in the UK, many valuation engagements in relation to smaller, closely held businesses have an underlying tax dimension to them. Without a tax background, it would be difficult to handle all but the easiest of tax related valuation engagements which continue to be the mainstay of many boutique valuation practices.
It would be fair to say that the CIOT exams were tricky perhaps even bordering on impossible. The exams, themselves have a reputation for being very difficult. They are generally only attempted by people who are already qualified accountants and lawyers. The pass rates are regarded as being low. The specialist exam in Inheritance Tax, Trusts and Estates is generally attempted by relatively few people and can have pass rates lower than 35% in a bad sitting. It took me three years to complete the tax exams during a tumultuous period in my life in which I experienced the highs of a newborn son and the lows of a serious road traffic accident. During this period of my training, much of my time was spent fully absorbed in tax and tax related issues and I was able to invest only limited time into learning about and understanding business valuation. My progress in valuation slowed to a crawl and with it, my confidence fell off a proverbial cliff edge.
A new opportunity came as I was nearing the end of my CIOT journey in July 2011. At this time, the Institute of Chartered Accountants in England & Wales ran a week long business valuation course (iiBV 101). The course was led by two tutors, John Barton of the American Society of Appraisers and Christine Sawchuk of the Canadian Institute of Chartered Business Valuers. Sian Kennedy observed on behalf of the ICAEW. I found John and Christine to be hugely inspiring and made new friends with whom I still connect with more that a decade later. I came away from iiBV101 that summer with a renewed motivation and good intentions to get back into and start learning about valuation. There is, however, an old saying, that the road to hell is paved with good intentions. Life was comfortable, and having completed the CIOT exams in Summer 2012, I was enjoying more personal time and less time sitting with tax textbooks.
Between 2012 and 2018, much of my training was “on the job training”. To quote from Dr Aswath Damodaran, “valuation is not an art nor is it a science. It is comparable to cooking - the more of it you do, the better you get”. Throughout this period, under the patient tutelage of Ms Nelder and Mr Bowes, I was soaking up valuation work. My horizons became broader and I immersed myself in valuations for tax, commercial and litigation purposes. Another career highlight came in the summer of 2015 when I attended my first ICAEW Valuation Special Interest Group conference. The key note speaker was Jim Harrington of, then, Duff and Phelps. Jim spoke on the small stock premium - the talk was energetic and inspiring. I came away from that conference full of everything new that I had learnt even if I didn’t fully understand or appreciate all of the nuances of what Jim has said.
In 2019, I felt the call for more formal business valuation qualifications. The call was actually born from an existential crisis when i started to think about where the last 10 years had gone and, more precisely, what future I might have in valuations. I looked forward with a degree of fear and trepidation and reasoned that there was a very real risk that, without major changes to my outlook and approach, I could eventually end up falling out of the valuation profession and back into general accounting practice. At this time, in the UK, there was just one Business Valuation credentialing organisation - the Royal Institute of Chartered Surveyors (RICS). Conversations with RICS proved fruitless. I needed to find a supervisor to oversee my training but was met with rejection and disinterest at almost every turn. Furthermore, even if I did opt to follow the RICS path to a credential, there would be no structured program of study that would lead to qualification. By the middle of 2019 I had all but given up on the idea of a RICS pathway to qualification.
As 2019 progressed, almost by sheer chance, and nearly a decade after attending iiBV101 in London, I came across the CBV Institute Program of studies - a program of six course exams in valuation that would ultimately lead to the Membership Qualification Exam and full membership of the CBV Institute. Oh - and with five years of post qualified experience, the possibility of direct entry to RICS. I was more or less immediately sold on the idea and signed up as a new CBV student over the Christmas holiday in 2019. January 2020 was quite a surreal time; despite advice to take things slow and steady, I signed up for two courses - Introduction to Valuation and Private Investments. I hugely enjoyed studying both. By this point in my career, I had a lot of practical experience doing valuations but very little theoretical understanding of what I was doing and how it all fitted together.
And then? Another roadblock. In March of that year, Covid hit. The whole world was locked down. As far as my CBV studies were concerned though, it was more or less business as usual as all of the exams were online. The CBV Institute also provided help to its members and students including a thoughtful course on how to study and work effectively from home.
The global valuation organisations, the American Society of Appraisers, the CBV Institute, NACVA and RICS helpfully provided two global town hall events teaching attendees how to factor Covid in to valuation engagements. As 2020 progressed, I attempted and passed a further three CBV exams such that my the end of 2020, I had almost completed the program of studies. Early the following year, I attempted and passed the Special Topics and Membership Qualification Examination. Although, overall, the CBV exams were very demanding and involved a significant investment of time and effort, the benefits have been invaluable. The CBV qualification provided me with a deeper understanding of valuation practice and provided me with the tools that I needed to approach each valuation challenge with confidence and skill.
Having completed the CBV exams, I became an Accredited Member of the American Society of Appraisers. I reasoned that this would have two major benefits. Firstly, US valuation practice is more precise than in other jurisdictions. DLOCs and DLOMs for example need to be supported empirically if they are to withstand scrutiny. Further, the pathway to the ASA designation also involves the submission of a demonstration valuation report. In the UK, preparation of a valuation report that would withstand US scrutiny is a major hurdle to overcome, but I reasoned that it would also be an extremely useful learning curve at this stage of my valuation journey. The European valuations world is a rather close-knit one. With this in mind and with a view to expanding my European network of connections, I am also currently in the process of completing the assessed case study requirements for the European Association of Certified Valuators and Analysts (EACVA).
Looking back on my journey since entering the valuation profession, there have admittedly been one or two lows but doubtless many more highs. Would I advise my 31 year old self, back in 2009, to follow the same path that I have done? Yes - I would do so in a heartbeat!