What Does Certified Valuation Analyst (CVA) Mean?
Certified Valuation Analyst is a professional designation awarded by the National Association of Certified Valuators and Analysts (NACVA) to business valuation professionals who hold a business degree, have sufficient work experience in business valuation, submit business and personal references and recommendations, are members in good standing of NACVA, and pass the five-hour multiple choice CVA exam.
Successful applicants earn the right to use the CVA designation with their names, which can improve job opportunities, professional reputation, and/or pay. Every three years, CVA professionals must complete 36 to 60 hours of continuing professional education.
- Becoming a CVA is a multiple step process overseen by the National Association of Certified Valuators and Analysts (NACVA).
- Typically about 93% of applicants who write the exam pass it.
- CVA can take on many roles and provide many functions, mainly related to valuing businesses.
Understanding the Certified Valuation Analyst (CVA) Designation
The study program to become a CVA covers business valuation fundamentals, techniques and theory; the income and asset approaches to business valuation; case analysis; and special purpose valuation.
Individuals with the CVA designation may work as merger and acquisition consultants, investment and financial analysts, financial officers, or other in other roles.
Duties may include providing guidance and figures related to a business that is being sold or merged, valuing a business that is being passed to family members, valuing a business so it can better find credit or funding, or determining a buy-in price for those looking to become partners in an existing business. CVAs may also provide possible exit strategies to business owners or partners, provide guidance on dissolving or dividing a business, provide guidance on financial matters in the event of a lawsuit, and indicate areas where a company could potentially grow.
Getting the Certified Valuation Analyst (CVA) Designation.
There are six steps to becoming a CVA. Those steps are broken down as follows.
- Meet the CVA qualifications and apply for the designation.
- Apply for membership to the NACVA, or pay a CVA designation fee.
- Study the required material in order to take the CVA exam.
- Pass the CVA exam.
- Take part in a peer-reviewed business valuation report.
- Pay NACVA membership fees or CVA renewal fees, as well as collect 36 to 60 hours of continuing education credits every three years to maintain the designation.
Is Getting a Certified Valuation Analyst (CVA) Next to Your Name Worth It?
This is a matter of opinion and will depend on the applicant's current employment or future goals.
90% to 95% of candidates who sit for the five-hour multiple choice/true-false CVA exam pass it. Applicants interest in the CVA designation might also consider whether pursuing a CFA or CPA certification represents a better choice.
Studying for the exam, and attaining the CVA designation, demonstrates a level of seriousness that may be absent in the non-designated business valuation practitioner. At the very least, learning new skills or lubricating rusty joints is always a good use of time. The time and money spent on earning the CVA mark, though, must be weighed against the benefits. Someone thinking about getting the designation may want to first survey the real working world about its value before committing to the program.
If currently employed with a firm, ask around to see if getting the CVA will improve the chances of attaining a promotion, increased pay, or a desired position.
If looking to gain employment, consider the job prospects of a CVA, and then research whether those firms prefer to hire CVAs, or if some other similar designation is in higher demand.
Example of What a Certified Valuation Analyst (CVA) Does
Consider the scenario of a CVA who has been requested to value a private business which the owner wishes to sell.
The CVA's job is to come up with a valuation that is fair. Neither too high, which won't attract buyers, nor too low, which will result in the owner receiving less than the business is worth.
Valuing a business goes beyond applying an industry average price/earnings multiple to it. The CVA will look at more in-depth factors, such as what all the tangible assets are worth, as well as the intangibles. Intangibles include customer lists, distribution, management, locations, copyrights, marketability, special agreements, and so on. These can dramatically change the value of a company and its future growth prospects. Looking at only the tangible assets doesn't provide this sort of information.
The CVA will also look at the business in terms of its management and employees, strengths and weaknesses, the company's financial health and financial management, the overall environment of the industry and the competitiveness of the company in it, growth prospects for the company and the industry as a whole, and the economic climate of the geographic locations the business operates in.
Using all this data, the CVA will select a valuation methodology applicable to the company and its circumstance. This will provide a value for the company which the owner of the business can then use to negotiate its sale. Coming up with valuation can take a considerable amount of time, from days to months, depending on the size and complexity of the business.