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Business valuation work is coming to your clients whether your firm is ready for it or not. M&A activity is accelerating. Private equity has completed a record 83 deals in the CPA sector alone in 2025. Baby boomer business owners are transitioning out of their companies at the highest rate in history.
Every one of these events requires a defensible, credentialed valuation and when the client's transaction is large enough to matter, they are going to call their most trusted advisor first.
That call can go two ways. It can be a moment where your firm deepens the relationship by leading the process, either through your own credentialed valuator or through a structured specialist partner. Or it can be a moment where the client discovers that their CPA does not do valuations, goes to a specialist, and that specialist expands into adjacent advisory work.
This blog examines the real pros and cons of building a valuation practice in-house, what it takes to do this work defensibly, where the professional liability concentrates, and how firms at different stages are structuring this decision.
Business valuation demand runs on several distinct drivers, and most of them are expanding simultaneously.
Middle-market M&A activity recovered strongly through 2024 and 2025, with average purchase multiples rising to 9.0x EV/EBITDA in the Business Services sector, up from 7.9x in 2023. Private equity has record dry powder, approximately $4 trillion globally, available for deployment.
Every platform acquisition, add on transaction, management buyout, and private equity raise involves a valuation opinion. For CPA firms serving owner managed businesses in the $5 million to $50 million revenue range, this is the most common valuation trigger within their client base.
With the federal estate tax exemption scheduled to sunset at the end of 2025 under current law, potentially dropping from approximately $13.6 million to around $7 million per person, estate planners and tax advisors have been driving a significant volume of valuation work for clients with closely held business interests.
Discounts for lack of control and lack of marketability applied to minority interests in family owned businesses are a primary planning tool, and each requires a defensible, credentialed appraisal to withstand IRS scrutiny.
The IRS actively challenges gift and estate tax valuations. Undisclosed valuation positions, where a taxpayer relies on an undisclosed valuation without a qualified appraisal, carry a 40% gross valuation misstatement penalty on any resulting underpayment.
Employee Stock Ownership Plan formations and ongoing annual valuations are a growing segment. ESOP trustee fiduciary standards require an independent appraisal of company stock and the Department of Labor actively scrutinizes ESOP valuations, particularly on formation. A valuation that does not survive DOL review can expose the trustee and the firm that provided the opinion.
Litigation support valuations for shareholder buyouts, divorce proceedings, and partner disputes are among the highest-fee valuation engagements because they require an expert willing to testify and defend their conclusions under cross-examination. This is specialized work that demands credentialing, experience, and the ability to withstand adversarial scrutiny.
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For the right firm, valuation is one of the strongest advisory practices to build. The arguments are specific and worth examining seriously.
Valuation engagements do not bill like tax returns. A business valuation for a mid-market M&A transaction or an estate tax planning engagement typically starts at $5,000 to $15,000 for a smaller business and scales significantly with complexity. Litigation support valuations that require expert testimony carry premium rates.
For a practice trying to shift its revenue mix from compliance toward advisory, a single credentialed valuator delivering six to eight engagements per year changes the firm's revenue profile materially.
When a client is selling their business, raising capital, planning their estate, or navigating a divorce, they are at a financial inflection point. The advisor who is present and useful at that moment earns a depth of trust that annual tax compliance does not.
Firms with credentialed valuators regularly report that valuation work becomes the anchor for multi-year advisory relationships, not because it recurs annually, but because it establishes the firm as the advisor clients call when the stakes are highest.
The baby boomer succession wave is not theoretical. Business owners who built companies in the 1980s and 1990s are now in their late 60s and 70s, and the M&A market for small to mid-sized closely held businesses is absorbing that supply.
For CPA firms with a significant book of owner-managed business clients, the probability that multiple clients will transact over the next five years is high. The firm with a valuation capability is in the room for those conversations. The firm without one gets a call after the deal is done.
Business valuation is also one of the most professionally demanding services a CPA firm can offer. The credential requirements, documentation standards, and examination exposure are all specific — and the consequences of getting it wrong are not limited to a bad engagement. They extend to professional liability, IRS challenge, and in litigation contexts, disqualification as an expert witness.
Signing a business valuation report without appropriate credentials is not a minor technicality. In IRS proceedings, estate tax valuations must be performed by a qualified appraiser as defined under IRC Section 170(f)(11) — which requires relevant education, credentials, and compliance with professional appraisal standards.
An appraisal performed by someone who does not meet the qualified appraiser definition can be entirely disregarded, with the 40% gross valuation misstatement penalty applying to any resulting underpayment.
In litigation, opposing counsel will attack the credentials of any valuation expert. A report from a CPA without an ABV, CVA, or ASA designation or without sufficient documented experience — will be challenged on qualification grounds before the substance is even reached.
The three primary credentials each carry real requirements. The ABV (AICPA) requires 1,500 hours of valuation experience plus examination. The CVA (NACVA) requires a five-day training program, examination, and demonstrated valuation experience.
The ASA (American Society of Appraisers) requires five years of full-time appraisal experience, coursework, two examinations, peer-reviewed report submissions, and USPAP compliance and is the most recognized credential in litigation contexts.
Sources: NACVA CVA qualification requirements; Intelek Business Valuations, ABV/CVA/ASA credential comparison, January 2026; AICPA ABV credential requirements.
The AICPA's Statement on Standards for Valuation Services No. 1 (SSVS No. 1) and the Uniform Standards of Professional Appraisal Practice (USPAP) both impose specific requirements on how valuation conclusions are reached, documented, and communicated.
A valuation engagement letter must define the standard of value, the premise of value, and the purpose of the engagement. The report must address all three valuation approaches income, market, and asset and explain why any approach was not used. Failure to follow these standards creates professional liability exposure and weakens the report's defensibility.
These are not procedural formalities. Courts and the IRS both examine whether professional standards were followed. A report that takes methodological shortcuts, such as omitting an approach without explanation, using guideline companies without adequate comparability analysis, or applying discounts without market based support, will be challenged on its merits.
Valuation judgment is built through repetition. The discount for lack of marketability applied to a minority interest in a closely held manufacturing company requires knowledge of the empirical studies supporting the range of reasonable discounts.
The factors that push a specific conclusion toward the high or low end of that range, and the current state of IRS challenge positions on discount levels. A firm doing two valuations per year does not develop that judgment. A firm doing thirty does.
The practical consequence: firms that take on valuation engagements at low volume are more likely to produce reports that do not hold up, less likely to recognize the methodological issues before the report is issued, and more exposed when a client's transaction or tax position is challenged on the basis of the valuation opinion their CPA signed.
Estate and gift tax returns involving closely held business interests are a consistent IRS examination priority. Revenue Procedure 2023-34 and related guidance have tightened the qualified appraiser requirements. The IRS has specific examination playbooks for challenging discounts, questioning comparability of guideline companies, and attacking the income approach assumptions used to value closely held firms.
A valuation that was produced by a general CPA practice without specialist depth is structurally easier to challenge than one produced by a credentialed team with documented methodology and current market data.
Signing a valuation report is a professional commitment. The credential, the documentation, and the methodology need to hold up under examination — not just at issuance.
The decision for CPA firm owners is not whether to be involved in client valuation needs — those needs exist and will surface regardless. The decision is whether to invest in building in-house capability or to structure the delivery through a credentialed partner while maintaining the client advisory relationship.
For firms without a credentialed valuator, referring valuation work without a structured partner arrangement is the riskiest option: the client goes to an outside firm, that firm delivers the valuation, and the client's relationship with that outside advisor deepens. A structured partnership keeps the CPA at the center of the engagement even when the execution goes to a specialist.
MYCPE ONE has been working with CPA and accounting firms for over 10 years. 200+ partner firms, 3,000+ professionals across 40+ offices in two countries, 10,000+ clients supported. The valuation practice within that network is credentialed, methodology-documented, and built to produce reports that hold up where it counts in IRS proceedings, in transactions, and in litigation.
No In-House Valuator? You Can Still Be the Advisor Your Clients Call First.
MYCPE ONE supports CPA firms with business valuation delivery through referral and white-label arrangements — your client relationship stays intact throughout.
Business valuation demand is growing, the client need is urgent, and the market is rewarding firms that can deliver credentialed, defensible opinions at the moments that matter most to clients. For firms with a credentialed valuator, building this practice is one of the strongest investments in advisory revenue available right now.
For firms without that credential in-house, the question is the same one that applies to EBP audits and Single Audits: retaining the engagement is not the same as protecting the client. A report that does not hold up under IRS challenge or adversarial cross-examination does not protect the client and a client whose valuation gets disqualified knows exactly who prepared it.
The right answer for most mid-sized CPA firms is to stay at the center of the client's transaction or estate planning conversation, structure the valuation work through a credentialed partner, and own the advisory relationship that surrounds it. That is the outcome the client needs, and it is the one that deepens the relationship regardless of who signed the report.
The three primary credentials are ABV (AICPA, CPA-only), CVA (NACVA, CPA or business degree), and ASA (American Society of Appraisers). For IRS purposes, a qualified appraiser under IRC Section 170(f)(11) must have relevant education and credentials and comply with professional appraisal standards. Without a credential, a report can be challenged or disregarded in IRS proceedings and litigation.
If the IRS determines a valuation results in a substantial estate tax underpayment (value understated by 65% or less of correct value), the accuracy-related penalty is 20% of the underpayment. If it is a gross valuation misstatement (40% or less of correct value), the penalty is 40%. These penalties apply to the taxpayer but the conversation about the report that led to them lands on the preparer.
The AICPA's Statement on Standards for Valuation Services No. 1 governs valuation engagements performed by CPAs. It requires specific engagement letter terms, consideration of all three valuation approaches, and defined report content. Non-compliance weakens the report's defensibility in IRS proceedings, litigation, and regulatory review.
Common triggers include: sale or purchase of the business, private equity investment or recapitalization, estate and gift tax planning, ESOP formation or annual update, shareholder buyout or dispute, divorce proceedings involving business interests, purchase price allocation under ASC 805, and goodwill impairment testing under ASC 350.
ABV is AICPA-issued and CPA-only, requiring 1,500 hours of experience plus examination, widely recognized in tax and accounting contexts. CVA is NACVA-issued and open to CPAs and non-CPAs, requiring a five-day program and examination broad market recognition. ASA requires five years of full-time appraisal experience, two examinations, peer-reviewed reports, and USPAP compliance. The most rigorous and most recognized in litigation and complex transaction contexts.
Christopher is the Director of Client Relations and Business Development at MYCPE ONE, a leader known for his energy and people-first approach. Chris leads from the front mentoring teams, driving growth, and building lasting client relationships. With over a decade of experience in sales, coaching, and business strategy, he has helped 5,000 CPAs nationwide overcome challenges and discover new opportunities. Chris is a familiar presence at major accounting conferences, representing MYCPE ONE and shaping meaningful industry partnerships. Passionate about leadership and professional growth, he continues to inspire teams and professionals to reach their highest potential.
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