On January 27, 2022 the AICPA FVS section released the podcast “Fair Value”. I was able to “sit” down with Mark Zyla and discuss a variety of topics impacting our profession today and discuss what the future may hold. Zyla is an accomplished, recognized thought leader in our profession. While we discussed a variety of topics (e.g., ESG, Int’l Valuation council, Standards, etc.) what I best remember is our discussion on the “Basics”. I remember Trugman discussing at the beginning of the pandemic for the profession to remember the basics. Zyla also confirmed this with me when we discussed asset risk, growth, and earnings as the foundation for a valuation. It got me thinking that there are so many focuses on the “next big thing” in the valuation world. Whether that be a new tool or concept. Unfortunately, what I see in practice is divergence of understanding the basics when discussing a subject and the conclusion of value. Zyla has laid a foundation for standards and I would suggest that anyone read this pick up some of his work, but also ask yourself the following questions while performing an appraisal:
- How does this company generate revenue (i.e. asset or combination of assets)?
- What is the projected growth and how is growth financed?
- What is the risk of this asset during its useful life?
Josh Shilts, CPA/ABV/CFF/CGMA, CFE
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