Certified Public Accountant (CPA) or MBA and MS in Finance for Business Valuation: Which Path Is Right for You?
Starting a business valuation firm can be a rewarding career choice, especially in today's dynamic market environment. However, the question often arises: Do you need to be a Certified Public Accountant (CPA) to embark on this path, or is a combination of an MBA and MS in Finance, combined with relevant experience, sufficient?
What It Takes to Be a Certified Public Accountant (CPA)
Being a certified business evaluator, a skills and knowledge that align closely with the responsibilities of a CPA, typically requires obtaining a CPA designation. This is the gold standard for professional accountants in the United States and can greatly enhance your career prospects in the business valuation field. Here are the key requirements:
Education Requirements: At least a bachelor's degree in accounting or a related field is required. Exam Pass: Passing the Uniform CPA Examination, which consists of four parts (Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation). Experience: Four years of professional accounting experience, gaining practical knowledge under a licensed CPA. State Law Compliance: Meeting state-specific continuing professional education (CPE) requirements and maintaining other state-specific certifications.Once you have your CPA certification, you are required to maintain it by completing a minimum number of hours of professional development training each year. This ensures you stay current with the latest accounting standards and practices, which is crucial in the business valuation industry.
Ingredients: MBA and MS in Finance with Experience
While a CPA is the official path to a career in business valuation, many aspiring professionals opt for a different route. A combination of an MBA (Master of Business Administration) with a specialization in Finance, along with relevant work experience, can also equip you with the necessary skills and knowledge.
MBA with a Specialization in Finance
An MBA with a Finance specialization provides a broad understanding of business principles, financial management, and strategic decision-making. Specific courses and electives in this field can be particularly valuable for aspiring business evaluators, such as:
Corporate Finance: Understanding capital structure, valuation models, and financial analysis. Advanced Accounting: Deepening your knowledge of financial accounting and reporting practices. Investments and Portfolio Management: Learning about investment strategies, risk assessment, and capital markets. Financial Statement Analysis: Interpreting financial data to make informed business decisions.An MBA can also offer networking opportunities and connections within the business community, which can be beneficial when starting a business valuation firm.
Relevant Work Experience
Experience is critical in the business valuation field. Relevant jobs in finance, accounting, or related industries can provide practical skills and real-world knowledge. Positions such as:
Financial Analyst: Conducting financial analysis and preparing reports. Accountant: Performing financial record-keeping and tax preparation. Consultant: Offering advice on financial and strategic issues to clients.Such roles can equip you with the practical experience needed to perform business evaluations effectively, providing you with a strong foundation in the industry.
Do You Need to Be Part of a CPA Firm?
Interestingly, you do not necessarily need to be a part of a CPA practice to become a certified business evaluator. Once you have your certification, you can set up your own practice as a business evaluator. This allows you to focus squarely on evaluating businesses, without the additional responsibilities of a full CPA practice. However, there are some exceptions:
SEC-Certified Organizations: Some business valuations must be undertaken by organizations that have been certified by the Securities and Exchange Commission (SEC). These organizations often belong to large accounting firms that have dedicated business evaluation departments. While these firms have the necessary resources and certifications, other professionals can also, with the required certifications and experience, offer similar services.
Conclusion: Which Path Is Right for You?
The right path to becoming a business evaluator depends on your personal career goals, background, and the specific requirements of your desired market segment. A CPA certification is the traditional path that comes with legitimacy and trust, while an MBA with Finance and relevant experience can also provide the necessary skills and knowledge.