Success in business valuation practices is driven by many factors, but three have shown to be key components for growing firms, according to market research firm IBISWorld. The first is developing specialized services that provide a competitive advantage. Specialized knowledge and experience allow a more effective, targeted valuation practice, which reduces competition. Specialization also cultivates a referral system, helping to win new clients who are looking for an expert in their particular niche.
A second factor that influences the success of a business valuation firm is its reputation. Valuation specialists need good reputations in order to win business, and aside from referrals, they can cultivate a good reputation through several methods. These include showcasing their expertise online and in the community and developing relationships with other professional service providers who might ultimately put clients in touch with the firm.
A third factor that can influence the success of a business valuation firm is having access to a skilled and flexible workforce. Professional associations can be a help in this regard. Having a good reputation and a strong online presence will also make it easier for good workers to find the firm.
Technology can play a critical role in each of these success factors for valuation practices. Solutions that provide access to information about specific industries can ease the process of establishing a niche practice. Those solutions that help generate quality, professional-looking valuation engagement reports can contribute to a good reputation. Automated solutions that make it easier for staff to do their jobs can help attract the best and the brightest to the firm.
While these factors can build upon each other, practices should not work on refining only one of the components at a time. Rather, by equally investing time and resources into each factor’s development, firms will find their efforts more effective for stimulating firm growth. In time, a focus on holistic improvement in each of these areas will prove beneficial for the firm and its respective clients.
Mary Ellen Biery is a research specialist at Sageworks, a financial information company that provides lending and risk management solutions to financial institutions and financial analysis and valuation applications to accounting firms.
Zach Meyer is a consultant with Sageworks.