- PwC partner Richard Stewart OAM FCA was recently appointed to the International Valuation Standards Council’s Business Valuation Standards Board.
- He encourages any CA ANZ member wanting to specialise in the business valuations field to become an accredited CA Business Valuation Specialist.
- As well as improving a CA’s skillset, such an accreditation is an essential to practise valuation in a courtroom.
By Stuart Ridley
Richard Stewart OAM FCA
Richard Stewart OAM FCA sees specialising in business valuation as an exciting growth area for chartered accountants looking to build their skills and practices.
“Some of our future prosperity is the result of decisions we make today,” he explains. “I’m interested in how we make better decisions for a better Australia, and modern accountants need to understand how to tell both the story about what happened but also about what could happen.”
Stewart wants to see more chartered accountants develop core skills in the area and encourages those who are making business valuation a significant part of their practice to become an accredited CA Business Valuation Specialist.
“The accounting qualification gives you many, many options, and the business valuation skill is an extension of that. It gives you a tremendous amount of relevant skills no matter how you might take your career forward,” he says.
“Provided you continue to refresh those skills over time, it’s a piece of credibility that will last you for your entire career – and if you want to practise valuation in a courtroom, it's an essential.”
A respected valuation specialist himself, the Sydney-based PwC partner was appointed to the International Valuation Standards Council’s Business Valuation Standards Board in April 2019.
He was part of the CA ANZ working group that provided guidance on the development of the CA Business Valuation Speciality course, and was a graduate of the first intake in 2014.
“The accounting qualification gives you many, many options, and the business valuation skill is an extension of that.”
What does business valuation involve?
One of the most common mistakes Stewart sees from accountants who aren’t business evaluation specialists is relying on the classic calculation of taking the last three years of earnings, averaging them, and then multiplying by five to get a valuation.
This old-fashioned approach is a “computation at best” rather than a true valuation, he says, yet it’s apparent that’s the way some deals are still done for certain small businesses.
So how do you get it right?
“You need to understand financial statements, financial mathematics and the way markets work. You especially need to understand how people make decisions,” Stewart says.
“Understanding the impact of decisions is just such a vital skill for the modern accountant and business valuation is the skill of assessing decision-making – you’re accounting for the future, if you like.”
Lifting the standard for business valuation
Stewart has been with PwC for 33 years, and a partner since mid 2000. He is an adjunct professor at the UTS Business School in Sydney and, in 2015, was awarded the Order of Australia Medal for services to the accounting profession.
In his role on the Business Valuation Standards Board, he is helping to lead the development of international standards at a time when businesses, markets and regulators around the world are calling for greater levels of professionalism and consistency.
“We’ve been working on improved qualification and standards of practice for about 15 years in the Australian market, so that was something I could bring to the international body,” Stewart explains.
“We’ll be looking at some of the issues that trouble accountants in valuing businesses when they're acquired, such as non-financial liabilities like warranties, contractual obligations and inventories, and how they're valued in transaction scenarios.”
Stewart says changes to the international leasing standard will be the next big change affecting business valuations, noting that it will have a particularly big impact on the retail sector.
The key dates for the second intake of the CA Business Valuation Specialist course in 2019 are:
Enrolment period: 24 June to 12 October
Study period: 17 October to 17 November
Online exam: 18 November
Portfolio interview assessment: 25-29 November (by arrangement with the member)
To register your interest in becoming a CA Business Valuation Specialist click here.