CPAs as a Valuation Sponsor
Because Wisdom Can’t Be Told!
Can CPAs Sponsoring a Valuation Exchange Enhance the Private Capital Market?
By Steve LeGraw, Managing Partner, Mentor Partners
A valuation exchange within a private auction platform could create more transactions. The what, who and when would be less of a mystery. By licensing the StatTrader technology CPAs become a part of a branded valuation exchange being created within an integrated network of investment bankers, commercial lenders and private equity groups (PEGs).
In the current system a professional sets the valuation expectation. The valuator considers all unique factors, gathers market multiples from limited sources and then applies their own “wisdom” to estimate a valuation range. This is an example of wisdom being told rather than being experienced. The buying and selling of companies needs a more dynamic and connective valuation exchange! Participation in private auction markets should be wide-open; and, participation should be set within the context of dynamically changing valuations – just like the public markets. If CPAs and I Bankers considered their client base an M&A market in incubation, more like the PEGs do now, then the discrete demand of a 3-6 month sale process would be replaced by dynamic interactive valuations, and more transactions, better approximating the efficiency of public markets.
CPAs have trusted relationships with virtually all of the 15+ million middle market companies in the United States, all of which could be granted access to this “filterable” on-line valuation exchange through their CPA’s website. It makes sense for CPAs to distribute this system. Clients expect their CPA to help them acquire and finance deals, and in so doing, CPAs will stimulate their core assurance and tax practices. Dynamic valuation information also creates a recurring demand for the valuation practice of CPAs, like an audit, review or tax return does now. Circulating client profiles to lawyers, investors, lenders and other professionals that are active in the M&A market will also make the CPA the hub of an organic referral network.
StatTrader is an M&A valuation incubator and auctioning platform. Each member can brand an “on-line” portal to the universal connective network. Professionals create a network of interested suitors around their clients and conduct private auctions when the time is right. Clients, investors and lenders use it to filter through opportunities and respond to opportunities “traded” to them by others. StatTrader is an affinity partner with the Rhode Island and Massachusetts Society of CPAs, wherein private label licenses are distributed to their respective members. If you are a CPA contact your State Society of CPAs. Learn more at www.stattrader.com.