IBA Course 8002 -Essentials of Business Appraisal
IBA’s Course 8002 is presented in two four-day segments. This course, together with IBA’s report writing (Course 1010) and accreditation exam preparation (Course 1006) courses, form the critical components of business appraisal study required to qualify for IBA’s Certified Business Appraiser (CBA) credential. There is much more to becoming a qualified appraiser than learning appraisal principles. A CBA is expected to be a subject matter expert. IBA presents its business appraisal training as a hands-on process, with participants working through each stage of the appraisal process. IBA’s instructors are selected from the profession’s leading practitioners.
Course 8002A provides an in-depth introduction to the fundamentals of business appraisal. Students learn about professional responsibility, IRS rulings and procedures (long considered the most important foundational information affecting the profession), engagement planning, financial analysis, industry and economic research, forecasting, and preliminary appraisal drafting.
IBA Course 8002A – Essentials of Business Appraisal – 4 Days
Day 1 covers:
· Overview of business appraisal. The context is set within which the profession of business appraisal operates. There are many applications of business appraisal, including Federal regulatory requirements, state and local issues, divorce, estate and gift taxation, and numerous (literally hundreds of) others.
· Presentation of IRS rulings and procedures. IRS has been known for over 50 years to set the standard for business appraisal requirements. Other agencies have used IRS rulings, incorporating them into their own regulations. Students learn the ins and outs of Revenue Ruling 59-60, forming the basis of most every business appraisal written.
· IBA and other organization standards and ethics rules. Appraiser professional responsibility is the single most important body of knowledge a professional can learn and understand. Practice success is determined by a firm’s (or appraiser’s) credibility. Knowledge and adherence to appropriate standards and ethics rules is essential to success. IBA members have long been known for their careful approach and constant focus on professional standards.
· Guided learning through one of the profession’s leading texts. Class instructors follow and demonstrate the best practices covered in the business appraisal profession’s leading texts and references.
· Financial analysis. Day one completes with the student beginning an analysis of financial statements, the most critical analytical element of business appraisal.
Day 2 covers:
· Practice management and development. Students learn and discuss issues such as marketing, referrals, communications with prospects and clients, and the critical element of engagement planning.
· Initial stages of engagement practice. Here, IBA ensures that our students understand how to gather appropriate information and documents with which to conduct the engagement. The effects of assumptions and limiting conditions, a very important part of engagement planning, are discussed.
· Management interview and site visit. Discussions with management and on-site visits to major facilities are essential elements of every business appraisal. There is an art and a science to successful interactions with company management. IBA shows students how to make most effective use of time during these stages.
· Planning the report. Students begin to outline the appraisal report. A good outline, consistent with sound report writing techniques and relevant standards, is the difference between a successful report and an unsuccessful one.
· Continued review of text material and financial analysis. Day two completes with additional focus on technical materials and financial statement analysis.
Day 3 covers:
· Economic and industry analysis. The most serious error an appraiser can make is assuming facts not known or knowable. Where does the appraiser get his or her facts? In this segment, IBA covers economic and industry analyses, the primary sources of macro information the appraiser uses to conduct financial forecasts and other analytical parts of the appraisal engagement.
· Subject company analysis. Business appraisers must have a thorough comprehension of the subject company. This is accomplished through discussions with management, site visits, financial analysis and other approaches covered in this segment.
· Analyzing and adjusting financial statements. Every company is different. Every appraisal approach (cost, market and income) requires a careful analysis of the subject company and industry and comparable company data. Here, the student learns how to identify specific elements of financial statements that may need to be adjusted in the appraisal process.
· Day three completes with a class example of company financial analysis.
Day 4 covers:
· Company financial analysis. The class completes the assigned financial analysis from the prior day. Working as a class enables students to learn from each other. Business appraisers often work together on large projects and collaborate with each other as issues arise that may not be within the expertise of any one appraiser. IBA prides itself on its “share the wealth” philosophy. Working in class as a team supports this organization principle.
· Forecasting. Business appraisers may not rely solely on management forecasts. Income forecasting techniques can be very complicated. Student appraisers are given the fundamentals of forecasting in this segment. Again, the class works a forecasting example together.
· Individual analytical work. Students work independently on financial statement analysis and adjustments, as well as income forecasting for a subject company. Instructors are available to assist, as necessary.
· Appraisal report writing. If time permits, students begin writing the first sections of their appraisal report. Students also receive guidance as to work assignments that prepare them for 8002B, the next IBA class.
Class size limited to 30 registrants. Path to the AIBA credential.
Course Level Intermediate
Author: Paul Hyde MCBA, BVAL, ASA, EA
CPE Credits: 32 hours
