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Valuing Accounting Practices

ISBN: 978-0-471-17224-6
304 pages
January 1997
Valuing Accounting Practices (0471172243) cover image
In-depth coverage of the valuation of accounting practices and of partial ownerships in those practices

Fundamental concepts and approaches related to accounting practices
* Illustrative income approach valuation methods
* Illustrative market approach valuation methods
* Illustrative asset-based approach valuation methods
* Preparing the overall accounting practice valuation synthesis and conclusion
* Identification and quantification of accounting practice valuation discounts and premiums, and other special topics related to the valuation of partial ownership interests
* Special topics related to the valuation of accounting practices
* Reporting the results of the accounting practice appraisal


This comprehensive guide covers every aspect of accounting firm valuation, from determining the circumstances in which the procedure should be undertaken to compliance with standards for reporting valuation results. It provides a solid conceptual and theoretical foundation for the analysis and appraisal of accounting practices along with numerous practical applications and illustrations.

The main body of the book is divided into four sections. The first section addresses the planning stages of the valuation, including motivations for conducting an appraisal, its purpose and objective, professional valuation standards, selecting a valuation approach, and data gathering. In the second section, specific accounting practice valuation methods are discussed and illustrated. These include market-based, income-based, and asset-based methods. This section also examines the process of determining the overall value of the business.

The third section of Valuing Accounting Practices focuses on the valuation of fractional or partial interests in an accounting firm. A large part of this discussion centers on the identification and valuation of discounts and premiums related to partial or minority ownership, with an emphasis on marketable versus nonmarketable interest and discounts for lack of marketability. Topics include empirical research, factors affecting marketability, consideration of transferability restrictions, and discounts and premiums for other nonsystematic factors. The fourth section defines standards for accounting practice valuation reports and provides a comprehensive sample report. Lastly, special practice valuation topics are discussed.

Supplemented with numerous checklists, quantitative examples, appendices, and bibliographies, this handbook is an indispensable resource for accountants and appraisers who value accounting practices. It is an excellent guide for sole practitioners or members of small and medium-size accounting firms who need to conduct self-appraisals for merger negotiations, new firm formation, litigation, or any other reason. It is also an important reference for divorce attorneys.
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Reasons to Conduct an Accounting Practice Valuation.

Professional Standards for Accounting Practice Valuations.

Purpose and Objective of the Accounting Practice Appraisal.

Basic Accounting Practice Valuation Approaches.

Data Gathering and Due Diligence for an Accounting Practice Appraisal.

Income Approach.

Market Approach.

Asset-Based Approach.

Valuation of Fractional Business Interests.

Identification and Quantification of Valuation Discounts and Premiums.

Valuation Synthesis and Conclusion.

Accounting Practice Valuation Reporting Standards.

Example of an Accounting Practice Valuation.

Special Practice Valuation Topics.

Appendices.

Index.
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ROBERT F. REILLY is Managing Director for Professional Services at Willamette Management Associates. A former partner and national director of the Deloitte & Touche Valuation Group, Mr. Reilly is widely recognized for both his professional achievements and his intellectual contributions to the profession. He is a frequent contributor to professional journals--including Management Accounting, the Journal of Pension Planning and Compliance, and the Journal of Property Tax Management--and he is a regular columnist for the American Bankruptcy Institute Journal. Mr. Reilly is coauthor (with Robert Schweihs and Shannon Pratt) of three previous books.

ROBERT P. SCHWEIHS is Managing Director of Willamette Management Associates. He was founder, national partner, and national director of valuation services for Valuation Engineering Associates, a business unit of Deloitte & Touche LLP. A much sought after speaker and conductor of professional seminars, Mr. Schweihs is also a prolific author. He has published numerous articles in professional journals and coauthored three books (with Robert Reilly and Shannon Pratt).
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