What Is a Chartered Business Valuator (CBV)?
A Chartered Business Valuator (CBV) is a professional designation for business valuation specialists in Canada. It is offered by the CBV Institute. This certification indicates an expert understanding of how to value every aspect of a business, including its cash flows, securities, and intangible assets.
- A Chartered Business Valuator (CBV) is a professional designation for business valuation specialists in Canada.
- Charted Business Valuator (CBV) is offered by the CBV Institute (formerly the Canadian Institute of Chartered Business Valuators (CICBV)).
- Business valuation refers to the process of determining the economic value of a whole business or company unit.
- Business valuation specialists produce a detailed report that can be used in a business sale, litigation matters, divorce proceedings, or in establishing partner ownership.
- Prospective CBVs must pass two years of coursework and 1,500 hours of work experience before they can sit the CBV exam.
Understanding a Chartered Business Valuator (CBV)
Business valuation refers to the process of determining the economic value of a whole business or company unit. A valuator quantifies the value of a business, its securities, or its intangible assets. Business valuation specialists produce a detailed report that can be used in a business sale, litigation matters, divorce proceedings, or in establishing partner ownership.
Business valuation specialists with a CBV designation have been trained to value both private and public firms. They do this by quantifying the firm's profitability, its tangible and intangible assets, and its future cash flows. While professionals with CBV designations may use a variety of methodologies to arrive at a conclusion, they are expected to explain their approach, methodology, and conclusions in an easy-to-understand manner.
CBV professionals may elect to use a cost-based approach, a discounted cash flow (intrinsic value) approach, or a market-based (relative value) approach. With a cost-based approach, the cost to build and the replacement cost are taken into account. With a discounted cash flow (intrinsic value) approach, public company comparables and precedent transactions are used. Finally, with the market-based (relative value) approach, future cash flows are forecasted.
A CBV may engage with a business as an independent expert or in an advisory role. CBVs are often engaged to work alongside lawyers, accountants, and tax specialists.
When CBV professionals are working in the context of litigation, they are tasked with quantifying the damages or losses arising in a legal dispute. Oftentimes, legal disputes require there to be quantified data that demonstrates there was damage, loss, and/or fraudulent actions committed by or against a company.
In these cases, the expert testimony and processes of CBV professionals are widely recognized and valued in litigation proceedings. Here are some examples of litigation situations where a CBV professional may be engaged:
- Breach of contract
- Loss of profits
- Business interruption
- Personal injury
- Shareholder disputes
- Matrimonial disputes
Here are some non-litigation situations where the services of a CBV professional may be necessary:
- Income tax matters
- Estate planning and corporate reorganizations
- Mergers, acquisitions, and divestitures
- Management buy-outs
- Financial reporting (IFRS and ASPE)
- Unanimous shareholder agreements (USA)
- Employee share ownership plans (ESOP)
Since the introduction of fair value accounting standards for valuing securities—such as FASB Accounting Standards Code topic 820 (Fair Value Measurements)—valuation as a specialized finance profession has grown.
It takes two years of coursework to prepare for the CBV exam.
How to Become a CBV
The CBV Institute is a nonprofit valuation professional organization that establishes the practice standards, educational requirements, and ethical guidelines for its members. It was founded in 1971 by 28 valuation professionals under the leadership of George Ovens. The founding of the CBV Institute was prompted by the introduction of taxation of capital gains in Canada.
To become a Chartered Business Valuator in Canada, candidates must first have a post-secondary degree, or CMA, CA, CGA, or CFA designation. Candidates for the designation must complete six courses total: four core courses that cover business and securities valuation, along with a law and taxation course and a list of electives that can be chosen by the candidate to round out their course line-up.
Candidates will study Canadian taxation and law, take courses in assisting with litigation and legal matters, and study the appropriate strategies for successful business valuation. They are also required to accumulate a certain number of hours of business and securities valuation practical work experience and receive a passing grade on the membership entrance exam. The coursework is intended to take two years, although candidates can take as many courses at a time as they wish to.
After receiving the designation, all CBVs are responsible for keeping up-to-date on all practices, rules, laws, and responsibilities that are relevant for their role. This may entail enrolling in regular and ongoing training throughout their career.
Most CBV candidates already have a certification in business finance or accounting.
A CBV designation can be a valuable credential in the world of corporate finance. Courts, government bodies, banks, and investors rely on these experts to determine the value of companies with many sophisticated assets.
Studies have found that a CBV credential is extremely valuable in the courtroom, where the value of a business might be contended by opposing litigants. Evidence provided by CBVs is more likely to be accepted in a courtroom setting than those with other credentials.
Prospective CBVs must first obtain a post-secondary degree, or a certificate in business accounting such as a CFA or CMA. After that, there is a two-year courseload in business and securities valuation classes before candidates can sit for the CBV exam.
How Long Does It Take to Become a CBV?
Before studying for a CBV certification, one must first have a post-secondary degree or an accounting certification such as CA, CFA, CMA, or CGA. After that, CBV candidates must complete six courses of study, usually taking around two years. They must also complete 1,500 hours of relevant work experience before they can take the membership qualification exam.
How Hard Is the CBV Exam?
Although it is difficult to predict how much difficulty the CBV exam will present to any particular candidate, it is an extremely specialized course of study with many challenging aspects. Publications by the Canadian Institute of Business Valuators show that some of the prerequisite courses have pass rates as low as 71%, with average marks ranging from 62% to 74%. It is likely that the CBV exam is equally challenging.
How Much Does a CBV Make?
The typical salary for Chartered Business Valuator (CBV) ranges from $83,000 to $200,000 CAD, according to figures from the McGill School of Continuing Studies.