Selecting the Right Valuation Partner: A Professional's Guide to Comparing Firms

Introduction

In today's complex financial landscape, obtaining a credible valuation has never been more critical - or more challenging. As a Valuation Professional with over 10 years of experience, I've witnessed firsthand how the choice of a valuation provider can mean the difference between a situation that succeeds and one that collapses under scrutiny.

This guide distills some professional insights into a structured framework for evaluating Valuation firms. These key considerations will help you select a partner capable of delivering defensible, actionable and valuation insights.

Core Evaluation Criteria

1. Professional Credentials & Standards Compliance

Critical Considerations:

• Accreditation Matters: Prioritize firms with ASA, RICS or CPA-certified professionals

  
  

• Regulatory Expertise: Verify experience with relevant standards (USPAP, RICS, HKFRS guidelines)

  
  

• Quality Assurance: Inquire about conservative assessments and internal review processes.

Professional Insight: "I recently reviewed a valuation where non-accredited appraisers did not apply discount rates for used goods, creating a valuation which was overvalued. This was later challenged by the defendant in court and it was proved the item could not be sold in the open market at that price."

2. Industry-Specific Valuation Expertise

Sector-Specific Evaluation:

• Transaction Benchmarks: Inquire about comparable reports the firm has worked on in the past.

  
  

• Methodology Fit: Ensure approaches align with industry norms (e.g., Apply discount rates for used items, make sure appropriate taxes and duties apply or not apply on certain goods).

  
  

• Specialization Depth: Ask for specific information on how the valuation was done to see if the Valuer can provide the details on that specific niche.

Data Point: Hong Kong Courts require Service Provider & Valuers Information in the Valuation report for proper defensibility.

3. Methodology Rigor & Transparency

Analysis Framework:

	Cost Approach	Sales Comparison Approach	Income Capitalization Approach
Best For	Assets with researchable cost basis	Active goods sold in an open market	Assets producing a steady stream of income
Key Risks	Cost reliability and Comprehensiveness	Need to ascertain“apple to apple” selections for accuracy	Does not take into account market information

Red Flag Alert: Firms that rely solely on rule-of-thumb multiples without proper justification or the application of different frameworks for similar items.

4. Independence & Conflict Management

Structural Safeguards:

• Fee Structures: Fixed rate fees preferred over contingency arrangements with details of each component listed. (e.g Valuation fee and court attendance fee listed individually.)

  
  

• Relationship Mapping: Disclose any affiliations with parties which could pose a conflict of interest.

  
  

• Documentation Standards: Make sure report includes a "certificate of value"  and a list of "Assumptions and Limiting Conditions".

Comparative Analysis Tools

Firm Evaluation Scorecard

Criterion	Weight	Firm A	Firm B	Firm C
Credentials	25%	★★★★★	★★★☆☆	★★★★☆
Industry Experience	20%	★★★★☆	★★★☆☆	★★★★★
Methodology	25%	★★★★☆	★★☆☆☆	★★★★★
Independence	15%	★★★★★	★★★☆☆	★★★★☆
Cost Efficiency	15%	★★★☆☆	★★★★★	★★★★☆

Due Diligence Checklist

1. Verify professional licenses registered with accrediting bodies.

   
   

2. Review sample reports for methodological consistency and compliance to court requirements.

   
   

3. Interview senior personnel who will work on your engagement.

   
   

4. Check references of similar engagements from other colleagues.

Conclusion: Making the Strategic Choice

Selecting a Valuation firm requires moving beyond superficial low price evaluation:

• Professional Certified experts in the field with deep experience and appropriate expertise

  
  

• Defensibility under regulatory scrutiny from courts and defendant lawyers.

  
  

• Actionability for accurate decision-making.

  
  

• Long-term reliability as a reliable partner that understands your deadlines and specific requirements.

Professional Recommendation: Allocate sufficient time for due diligence – the time invested upfront can prevent inappropriate information, litigation or court complications.

Need Expert Guidance?

Brooks Matheson provides Professional Valuation Services which covers all the required Credentials & Standards Compliance, Industry-Specific Valuation Expertise and Independence to cover all the risk factors mentioned above.

Contact our team for a confidential consultation.

About the Author(s):

Mark Yu is a seasoned valuation expert with over 15 years of experience in corporate valuations, Plant, Equipment and general stock appraisal, specializing in Corporate, Plant, Machinery and Generally Traded Merchandise Valuations. Mark has helped clients navigate complex valuations for transactions, regulatory reporting, litigation, Corporations and strategic planning and has appeared as a veteran "expert witness in valuations" within various Hong Kong courts.

Billy Leung is an Accredited Senior Valuation expert with over 20 years of experience in Plant, Equipment and general stock appraisal. He is an Accredited Senior Appraiser of ASA, (USA) with Specialties in Machinery & Technical for Plant, Machinery and Generally Traded Merchandise. Billy has performed many complex valuations involving hundreds of plant equipment in a single factory. He also helps clients navigate extensive valuations for regulatory reporting, litigation and strategic planning and has appeared as a veteran "expert witness in valuations" within various Hong Kong courts.