Finding the Hidden Talent

Don’t kid yourself.  You’re not going to get that three to five year experienced person.  On the other hand, you might be surprised at the capabilities of today’s grads.

We found just such an example at West Virginia University, in Morgantown, WV.   Ashok Abbott, a valuation consultant whose work appears in industry publications, is Associate Professor of Finance at WVU.  We spoke with Dr. Abbott about preparing students for business valuation careers.

BORROWMAN:

In the time that you have been a professor, have you seen finance majors have greater knowledge about business valuation as a career than they did ten, or even five, years ago?  Why do you think this is?

ABBOTT:

It’s only in the last five years or so that we have started seeing the valuation firms come to finance graduates.  I think there’s been a switch from accounting-based analysis, to more finance-based analysis; which is a very welcome development.

BORROWMAN:

Give us a quick overview of the finance curriculum at WVU.

ABBOTT:

The typical finance graduate has exposure to core corporate finance.  In one sense, this is an all-encompassing valuation assignment on a firm.  Ultimately, the goal – the mantra – is maximization of shareholder value.  Everything else that happens in the firm, whether that’s how much they borrow, their capital structure,  what kind of projects they invest in, their capital investment analysis, their dividend policies; everything is geared towards maximizing the value of the firm.  In effect, you’re measuring the value of the firm before and after each of these actions.  That’s the real crux of finance.  And that’s the training.

BORROWMAN:

By the time these students graduate, what has been their exposure to business valuation, specifically?

ABBOTT:

Typically, what you end up doing is looking at publicly-traded companies and measuring their value as each of these components change.  We use an “event study” method that would have students examining the impact of a corporate event such as a merger, an acquisition, or a change in the CEO and answer the question: Is that creating a change in value for this firm?  Similarly, you can look at a firm’s dividend policies, whether that means starting, or stopping, or changing them somehow and ask the same question.

BORROWMAN:

How would you compare that level of exposure in the WVU curriculum to what a student might receive at other colleges or universities?

ABBOTT:

Basically, all accredited schools of business have underlying curriculum that has to be approved by a central body.  So you would see them doing similar things at schools of comparable levels.

BORROWMAN:

Is there anything unique about the WVU that prepares students to jump into BV careers?

ABBOTT:

Our undergrad students have the usual core of finance ranging from basics such as risk/return concepts to more sophisticated elements and how they translate to value.  We also have two specific, semester-length courses covering business valuation.  By the time the students complete those courses, on top of the core curriculum, they’re very well prepared.

BORROWMAN:

It can be difficult for some practices to consider fresh grads – even those with additional BV education – because the timing of graduation doesn’t always fit with the need for staff, or because of the concern that a fresh grad will require too much training and supervision.  What do you say to them?

ABBOTT:

The dominant mode of recruitment is no longer a traditional on-campus interviewing, followed by a firm visit, followed by an offer (or not).  We’re finding that many firms are inviting students for a summer internship in the summer before their graduation year.  That becomes an extended interview where you get to interact with the student a lot.  You get to see what they can do and where they need to improve.  When the student returns to school, the final year allows for the additional seasoning needed to return to that practice as a productive employee.

This is an especially good model to follow with our business valuation students.

In addition to his duties at West Virginia University, Ashok Abbott consults for the valuation divisions of well-known firms, such as Duff & Phelps, Willamette Management Associates, Houlihan Valuation Advisors, Minnesota Business Valuation Group, and BGBC partners.  He is nationally renowned for his groundbreaking work on liquidity discounts and is available for consulting engagements.