Normalizing Financials in Business Valuation: Using Forensic Accounting Skills to Your Advantage

Co-Sponsored by the National Association of Certified Valuators and Analysts®  (NACVA®) 

	Program Description		Presenter
	How You Will Benefit		Schedule

Program Description
When valuing a business, one essential step in the process is to review and analyze the subject company’s historical financial information. This information allows a business valuator to analyze the company’s past performance, identify where it stands compared to others in its industry, and pinpoint trends in the business to forecast its future performance, which is vital to determining the company’s value.

However, for most closely held businesses, certain aspects of their historical financials may need to be adjusted to capture their true economic well-being. These adjustments are called normalization adjustments and are intended to remove the items from a subject company’s financials that a willing buyer would not take into consideration when assessing the income or cash flow of the company on a go-forward basis.

Some items that would require normalization adjustments include nonrecurring income or expenses and owner’s discretionary expenses, such as owner’s compensation and perquisites. These items may not be reflective of the subject company’s true economic performance and more reflective of the decisions made by the previous management or owner. Therefore, a willing buyer of the business may not expect these items to affect the business in the future.

Not all business valuators are forensic accountants, but when they are, they have the analytical skills to effectively identify normalization adjustments required when valuing a business. Through this presentation, I will share investigative techniques and analyses, often used by forensic accountants, that are very beneficial in the normalization process of a business valuation.

How You Will Benefit
After completing this course, attendees will be able to:

• Recognize the importance of normalizing financials for valuation
• Identify normalization adjustment items in historical financials
• Assess how financial forensic case studies are similar to business valuation case studies
• Integrate analytical skills and techniques to identify normalization adjustments
• Recognize that forensic accounting skills can be applied to business valuations
• Revise and enhance your financial analysis process in business valuation

Delivery Method Group Internet-Based Program Level Intermediate Advanced Preparation None Prerequisites Previous training or research on subject matter being taught. Such persons are often at a mid-level within the organization, with operational and/or supervisory responsibilities.    Finance 1 Total CPE Hours   1

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