As valuation professionals, you probably get asked about your expertise in certain industries when bidding on new appraisal projects. This is a reasonable question to receive from potential clients looking to engage with the most qualified candidates, however, your response should be both an honest and thoughtful one, focusing on the realities of industry experience.
The vast majority of certified and accredited appraisers, whether they specialize in business valuation, machinery & equipment, personal property, real estate, or any other discipline, cannot afford to limit their experience to a few specific industries, as this would severely reduce the number of opportunities for work and future growth of the business.
The fact is that companies who focus solely on valuation work and have the necessary credentials and experience as appraisers can effectively value properties across any and all existing industries and market segments. This is primarily because the continuing education and experience derived from working as a valuation professional is focused on implementing consistent and effective approaches and methodologies for appraising any company or asset, regardless of the industry. In addition, the appraiser will always rely, in part, on the specific market segment data and sources developed during the valuation process. Understanding how to research, review and analyze the market and industry data, while independently concluding on a reasonable value, is what separates the experienced appraiser from the rest of the pack.
There is a distinct difference between experience and expertise. As an appraiser, you may have years of experience valuing businesses within dozens of distinct industries, which is useful when potentially working in those same markets in the future, however, your expertise is in valuation and doesn’t need to be industry focused.
There are specific industry consultants who exist to assist their clients in any number of business decisions that can affect a company’s future success. For example, an oil and gas consultant might help their client enter a new energy market segment by developing a business plan that involves various marketing and investment strategies. That is generally where industry expertise comes into play. They may understand the concept of valuation and have certain opinions, however, they lack the training, experience, and expertise to effectively appraise that business.
In summary, it is important to advise your clients of these distinctions and the fact that your expertise is in valuation and not limited to any particular industry. An effective response can help explain that you will consider their specific market and industry as part of the overall appraisal while applying accepted, time-tested methodologies resulting in an independent, supportable conclusion of value.