How are Business Valuations Conducted by BC CPAs

Business valuation by CPAs in BC typically follows a structured process that begins by defining what is being valued, why, the standard of value, and the valuation date.

Valuators then gather financial information and analyze the company’s historical performance and industry outlook. Next, they select appropriate valuation approaches and methods and calculate an estimate of value, which is documented in a valuation report.​

Common valuation approaches include the income, market, and asset-based approaches​

1. Income Approach – values the business based on its ability to generate future earnings or cash flow, often using discounted cash flow projections or capitalization of earnings.
2. Market Approach – values the business based on prices of comparable company sales, with adjustments for differences in size, growth, or other factors.
3. Asset-Based Approach – calculates value from the company’s net assets (assets minus liabilities), appropriate when asset values drive the business’s worth or if the company is valued on a liquidation basis.​

Regulatory Framework and Professional Standards in BC

CPAs in BC adhere to professional standards in valuation engagements. The Canadian Institute of Chartered Business Valuators (CICBV) – now the CBV Institute – is Canada’s main business valuation body and issues practice standards for valuation reports.

CBVs are recognized as independent experts by courts and regulators and are accepted as expert witnesses in litigation and by the Canada Revenue Agency in tax matters.

Factors Influencing Valuation and Importance

Many quantitative and qualitative factors influence business valuation. Key factors include the company’s financial performance (revenue, profitability, growth), industry and market conditions, and the value of its assets – both tangible and intangible (e.g. real estate, equipment, intellectual property, goodwill)​.

Why is Business Valuation From a CPA Important?

Business valuations by CPAs play an important role in the overall transaction process. They provide an objective basis for transactions such as mergers, acquisitions, or buyouts, and often serve as key evidence in shareholder or matrimonial disputes.

Valuations are also vital for tax planning – in corporate reorganizations or estate freezes, tax authorities (e.g. CRA) expect supportable values. Furthermore, lenders and investors often require reliable valuations for financing or investment decisions, and engaging with a CPA ensures the valuation is performed with recognized approaches and standards, lending credibility to the result.

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