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A valuation analyst is a professional who determines how much a business is worth. The valuation process includes consideration of tangible assets, such as equipment and real estate, as well as intangibles, such as reputation, location, and client list. When a valuation analyst is certified, it means that he or she has met qualifications determined by a government agency that allow him or her to practice as an official certified valuation analyst. Qualifications normally include an academic degree in accounting, completion of valuation courses, and satisfactory score on a proficiency exam. A certified valuation analyst normally works for a firm that specializes in business appraisals and consults business owners who are interested in learning the true value of their businesses.
In many cases, a certified valuation analyst is also a Certified Public Accountant (CPA). This is an accounting professional who is trained and certified to gather and organize financial documents that can be used for business planning and auditing. Analysts may also be financial advisers, commercial real estate brokers, or any other kind of professional who is trained to analyze value of a business.
One of the first things a valuation analyst will do is determine the value of a business based on tangibles, such as equipment, and actual cash flow and profitability. This part of the valuation process can be straight forward and may require knowledge of basic accounting principles. A certified valuation analyst, however, understands that the value of a business should be greater than just the worth of tangibles.
A number of other factors impact the value of a business. If a business has been around for many years, for example, and its name has developed a good reputation among customers, its name and logo are considered to be valuable assets. Management and business processes can also be said to have value. When a business has developed an effective management process or workflow, these systems are also considered assets.
When valuing intangible assets, a certified valuation analyst normally is expected to provide reasons for why he or she gave it a particular value. Reasoning is often supported by charts and statistics that can help prove worth of intangible assets. These explanations are particularly important when a business owner is considering selling or merging his or her company. If a potential buyer believes that a business has been too greatly valued based on appraisal explanations, he or she might turn down an offer.
An understanding of a market can be important to a certified valuation analyst. Aside from a business's assets, an analyst must also understand the economic climate in which a business is operating. High levels of competition or decreased levels of demand can lower the value of an organization.
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