The rapidly evolving healthcare industry presents unique challenges to determining the value of a business. Given the complexity of healthcare regulations (e.g., Stark Law) and reimbursement structures, having a well-documented and defensible appraisal is essential for mitigating risk and maximizing financial outcomes. The blog post below will help owners of healthcare-related businesses to understand the importance of hiring a qualified business appraiser and the necessary credentials to be considered “qualified appraiser.”
Who is a qualified business appraiser? A guide for business owners and advisors
As discussed in our recent blog post regarding a qualified business appraisal, appraisals may play a critical role when it comes to estate planning and tax reporting. Under treasury regulation §1.170A-17, a qualified appraisal is an appraisal document that is prepared by a qualified appraiser. But who exactly is a “qualified appraiser,” and why is it important to engage such a professional?
Key qualifications of a qualified (business) appraiser
As defined under treasury regulation §1.170A-17, a “qualified appraiser” is an individual with verifiable education and experience in valuing the type of property for which the appraisal is performed. Further, this section goes on to describe some of the necessary education and experience to be considered qualified, such as:
- Education and credentials: A qualified business appraiser often holds advanced degrees in finance, accounting, or a related field. They also possess recognized business appraisal certifications, such as the Accredited in Business Valuation (ABV) designation awarded by the American Institute of Certified Public Accountants (AICPA) or the Accredited Senior Appraiser (ASA) designation awarded by the American Society of Appraisers (ASA). Membership in professional organizations, such as these (e.g., AICPA, ASA, etc.), indicates a commitment to ongoing education and adherence to generally accepted appraisal standards (as required for a qualified appraisal).
- Experience: A qualified business appraiser has years of experience appraising businesses and, further, has an understanding of the specific challenges, regulations, and market dynamics, in the industry for which your business operates. Moreover, an appraiser should have knowledge in preparing appraisals for the intended purpose and use of your particular valuation need. Appraisers should regularly prepare appraisals and be compensated for their performance.
Finally, appraisers must avoid certain relationships with the client to be considered a qualified appraiser. For example, the appraiser must not be the donor or donee of the property, be in other close relationship to the donor or donee, or receive a contingent fee based on the appraised value of the property.
Conclusion
For business owners and their advisors, working with a qualified appraiser ensures that your business is accurately valued and meets compliance requirements. Without hiring a qualified appraiser, a business appraisal will not be considered “qualified,” and could lead to audit, penalties, and prolonged legal disputes. Whether you’re planning for the future or navigating complex decisions in the here and now, a qualified appraiser provides the insights and confidence you need to achieve your goals.
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