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John Borrowman, CPC
Borrowman Baker LLC
What was originally intended as a five-year review of ASA’s BV credentialing courses took on an unexpected dimension when it coincided with one of the most unusual times ever seen in American finance. We talked to John Barton, Chair of the BV Committee, about the result.
It was the challenge of having enough volunteers which accounted for the 10 or 15 year lag preceding the 2005 update, explained Barton. As they completed that review, the Education Committee vowed to keep their ranks filled so a five-year review cycle would become the standard.
The impact of the micro-economy and traumatic recession provided unusual motivation to their effort. Variables that drive practitioners’ judgments were going off the charts. As Barton went on to say, “If the practitioner just grabs the risk-free rate, or the equity risk premium and makes assumptions about Beta, and so forth, he could be coming up with a very wrong number.” New to the curriculum, then are instructions, included in both BV202 and 204, about how to adapt to the extraordinary time you’re in.
Advancements in DLOM and the introduction of so many new tools in the last five years drove updates in this area. BV201 is a broad introduction to how to do BV, along with some work on the cost and market approaches. BV202 is a concentrated look at the income approach. By that point, Barton notes, you have the basic body of knowledge. Redundancy was alleviated by confining the Case Study work to BV203. BV204, formerly the Case Study, is now more of a special topics course which covers the DLOM, volatility in cost of capital, issues in pass-through taxation, valuing intangibles, and international cost of capital.
Instructor-led review and commentary alternate with group work all three days.
Looking back on the review process, Barton sees useful lessons for the profession. “If you did a valuation at the end of 2008,” he explains, “and you did it the same way you did it in 2006 or 2007, you’d come up with a very, very wrong number. We needed to be sensitive to the kind of changes we’ve seen recently, and their impact on the curriculum.”
Barton’s view is that the basic body of knowledge for the BV professional doesn’t change. What does change is the world in which that knowledge gets applied.
ASA’s course update better equips professionals to adapt to that changing world.