As regional M&As spike, Singapore’s business valuation body sees benefit of standardised practices across countries

AMID an increasing volume of mergers and acquisitions (M&As) conducted globally, the Institute of Valuers and Appraisers, Singapore (IVAS) is looking to roll out its Chartered Valuer and Appraiser (CVA) programme to markets in South-east Asia, in a bid to standardise valuation practices across the region.

The goal is to have the CVA certification recognised and accepted as a “trustworthy hallmark” of business valuation by countries beyond Singapore, IVAS council chair Lie Kok Keong told The Business Times in an interview.

“IVAS has done reasonably well in the Singapore market (in having the CVA designation recognised). Now we would like to expand our footprint in the region,” he said. Lie is also the co-head of PwC Singapore’s M&A advisory practice and head of its valuation practice.

IVAS was set up in 2013 to build up Singapore’s pool of business valuation professionals.

In 2016, it launched the CVA programme – Asia’s first certification programme for the practice of business valuation.

Today, there are 281 CVA charter holders and 334 associate CVAs from 12 markets in Asia-Pacific. Participants are conferred the designation of associate CVA upon completion of the CVA programme; they can become a CVA charter holder after accumulating necessary valuation experience.

About 80 per cent of today’s CVA charter holders are from Singapore, with the rest from Australia, Hong Kong, China, India, Indonesia, South Korea, Malaysia, the Philippines, Taiwan, Thailand and Vietnam.

Lie eventually hopes to grow the number of CVA charter holders across the region to 1,000 by 2027.

“Should the CVA designation gain more acceptance in the region, it will provide reliable valuation to enable businesses to do transactions in the region – whether in the acquisition of businesses, assets or intangible assets,” he said.

IVAS is next looking to tie up with regional partners – such as institutes of higher learning or professional educational institutes – to physically offer the programme in markets outside Singapore.

The CVA programme is spread across 18 months, including the assessment. It is conducted entirely online for overseas participants at the moment, while those based in Singapore are able to attend in-person classes at the Nanyang Technological University, IVAS’ academic partner.

Finding common ground

Lie noted that there is currently “no standard set-up” in South-east Asia, with different markets following their own set of business valuation practices.

For instance, some valuation professionals may use valuation techniques under the International Financial Reporting Standards – a set of accounting rules widely used around the world for financial reporting – for the purpose of business valuation instead.

This is where IVAS’ CVA programme wants to come in.

Its curriculum is aligned with international valuation standards that have been developed by the International Valuation Standards Council (IVSC), a non-profit organisation that serves as the global standard setter for the valuation profession.

In view of the growing volume and value of cross-border deals in recent years, Lie sees a greater necessity for valuation practices to be standardised across the region.

A gap emerges when valuation reports across markets are not prepared using the same standards, he said. This makes it more difficult for the buyer and seller to come to a consensus on the value of the company in question.

“If you have a consistent way of preparing the value, then it narrows down the range for negotiation,” he explained.

“Once you narrow down the range, expectations on both sides will be within reasonable bounds and the business transaction can be conducted.”

International valuation standards have also gradually gained acceptance across the world, and the expectation is that valuation reports prepared under them “will be robust, reliable and consistent”.

Meanwhile, valuation has become trickier over the years, he noted, as businesses grow in complexity – from rolling out more services and products, to having operations across more countries.

“Therefore, valuation professionals require more data to accurately value the different parts of a business,” he said.

More work to be done

But IVAS has its work cut out in promoting the recognition and acceptance of the CVA certification.

Lie said it will first take time to convince other regional markets to recognise the CVA programme as a legitimate, credible alternative to other existing programmes in the market.

“There will naturally be the initial thinking, ‘why is the CVA superior to what they are already doing?’”

He noted, for example, that people are more familiar with the Chartered Financial Analyst (CFA) programme, which was established in 1963.

Yet, unlike the more specialised CVA programme, the CFA covers broad financial concepts and does not go in-depth into business valuation fundamentals, he said.

There is also the challenge of getting regional regulators to recognise the CVA certification as a mark of quality for business valuation and allow CVAs to perform the necessary work required to value businesses, he added.

To this end, IVAS has stepped up efforts to engage and educate regulatory counterparts in the region, such as professional bodies overseeing the accounting sector or capital markets in neighbouring countries.

This includes sharing best practices and common pitfalls in valuation for financial reporting purposes with associations such as the Asean Audit Regulators Group.

“We want to explain our CVA programme to them, so they can understand that all our CVAs are trained and competent in valuation,” said Lie.

IVAS has also sought to raise awareness of the CVA certification by reaching out to the region’s broader business valuation professional community.

Besides running annual business valuation conferences in South-east Asia in partnership with IVSC, it launched a series of webinars titled ValuAsia Connect in March 2024 covering developments in the business valuation space. Over 740 attendees from 74 countries attended its first two webinar sessions.