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How tax accountants can provide valuation services

Mary Ellen Biery
November 25, 2014
Read Time: 0 min

For some accountants, tax and audit services are attractive for the recurring revenue streams and steady client base they provide. Some of those same accountants believe they’re too busy to provide value-added type 2 services such as business valuations, so they refer out their clients who have needs in those areas. 

Indeed, more than 35 percent of financial professionals polled during a recent webinar on how to prepare for booming growth in the valuation industry said they have sent clients seeking valuations to a third party. 

But those referrals can be risky, according to Paul Wapner, CPA/ABV, CGMA, who is manager of forensic and valuation services for the AICPA.

“Any time that you send a client to work with someone else, there is a risk you could lose that client,” Wapner said during the webinar. 

CPAs providing tax services, especially, should find that offering valuation services is an attractive way to not only retain those clients but to also generate new revenue from these existing clients. These accountants are already viewed as trusted advisors on many tax-related matters that can involve valuations, and demand for these services is likely to grow in the coming years as baby boomers age.

Baby boomers are hitting age 65 at a rate of 10,000 a day until 2030, according to the Pew Research Center, and many of them will turn first to their accountant for help planning the distribution of their wealth. That transfer of wealth may be through the sale of a business, gifts or inheritance. 

Here are five opportunities that Wapner mentioned for CPAs providing tax services to offer business valuations:

1. Estate tax: Business interests must be valued to determine whether estate tax is due, and planning for an estate tax before death may require a valuation.

2. Gift tax: When a business interest is given as a gift, a valuation may be required. 

3. Income tax: Wapner said this is less common after previous changes to goodwill and amortization rules, but valuations can be needed sometimes for purchase price allocations. And valuations can be used in planning for any built-in gains taxes that might arise from S-Corp conversions.

4. Charitable contributions: The IRS requires a qualified appraisal for any charitable contribution over $5,000. Wapner said this can come into play if an equity security or other business interest is being given away.

5. Family limited partnerships: A common vehicle used in tax planning, family limited partnerships have some unique characteristics that make it important for the financial professional to understand not only the valuation issues but also the tax implications. “This puts CPAs at a unique advantage over business brokers or a non-CPA valuation analyst,” Wapner said. 

While offering business valuations can help tax accountants retain clients, it benefits the practice in other ways, too. The business valuation market is growing at a faster rate than traditional accounting services, and its profit margin is 60 percent higher, according to recent reports by IBISWorld. CPAs with specialty credentials such as the AICPA’s Accredited in Business Valuation (ABV) credential also earned nearly $27,000 more in annual compensation than those without the credentials, Wapner said, citing AICPA data. And of course, offering valuations could open the door to winning new clients. Essentially, these firms could be the ones getting rather than giving referrals.

Using time-saving technology to perform compliant valuations can make valuation services even more profitable. Sageworks Valuation Solution is the only commercial-grade, web-based solution that standardizes the business valuation process yet leaves flexibility for professional judgment in the engagement process. It uses the three main approaches to generate the most accurate valuation possible and to ensure compliance with AICPA guidelines.

For more information on how Sageworks Valuation Solution increases efficiency, improves workflow and ensures accuracy, watch a walkthrough. You can also listen on demand to the complete webinar featuring Wapner and Aaron Lively, Sageworks’ regional valuation consultant.  

About the Author

Mary Ellen Biery

Senior Strategist & Content Manager
Mary Ellen Biery is Senior Strategist & Content Manager at Abrigo, where she works with advisors and other experts to develop whitepapers, original research, and other resources that help financial institutions drive growth and manage risk. A former equities reporter for Dow Jones Newswires whose work has been published in

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