Valuation service is a highly specialized offering, and only those who are an integral part of this industry can fully appreciate the complexity it involves and myriad of variables that need to be analysed to execute an engagement. Client businesses vary based on the industry they operate in, size, capital structure, geography, tax status, et al. Any of these businesses may need a valuation engagement, which could be for regulatory compliance, business restructuring, financial reporting, intellectual property valuation, raising capital, or a combination of any of the aforementioned objectives at the same time.
A valuation services firm needs to satisfy the client’s needs while still delivering a tenable outcome that passes the scrupulous and piercing lenses of both regulators and auditors. Hence, it is of utmost importance to maintain independence, keep detailed documentation and have a clear audit trail. Given these challenges, many valuation services firms choose to operate as niche players. For example, a company might choose to focus on providing M&A advisory services in the healthcare sector only. While such focused strategy may give it a leading edge in a particular sector, it limits its growth and subjects it to concentration or sector specific risks.
One of the things industry leaders have successfully done to overcome these challenges is to develop a diversified portfolio of offerings in collaboration with offshore partners in knowledge-based economies, such as India, where several players, including Knowcraft, operate as dedicated valuation service partners. However, owing to fierce competition and in a bid to gain market share, a plethora of offshore companies are offering services at extremely low prices. This has resulted in a decline in the overall quality of services provided and a feeling of distrust among the valuation services firms. Nonetheless, collaborating with an offshore partner still remains a viable option given the cost arbitrage, scalability and value addition it offers.
So, what are the key filters that a growing valuation services firm must apply before choosing an offshore valuations partner? Here are the top five “must have” qualities in your offshore partner:-
Top Notch Team
It goes without saying that the offshore partner must have a well-qualified and an experienced team. Further, the leadership that spearheads the team should be seasoned enough in the field with at least a decade of experience in the various facets of valuation. Sector specialization that matches a valuation services firm’s area of expertise can prove to be an added advantage. We at Knowcraft have a judicious mix of MBAs from premier business schools, CFAs, Chartered Accountants (equivalent to CPAs) and researchers with requisite skills and relevant experience in valuation, financial analysis and research with specialization in healthcare, life sciences, and technology.
Enviable Track Record
The offshore partner’s team must have a proven track record in the related area of expertise. It is not enough to merely showcase capability through verbiage. They must be able to provide live cases through realistic sample work and most importantly client testimonials. Since inception, Knowcraft has collaborated with 15 valuation and consulting firms across the United States and has completed more than 2,000 projects that include 409A, complex derivatives, gift and estate tax valuation, purchase price allocation, forecasting, buy/sell side advisory, etc.
Valuation services firms are often unable to correctly size up with their offshore partners’ skillset or their potential to take up the required volume of work. Sometimes, the valuation services firms may not even have enough volumes to pass on to a reasonably large offshore partner. These parameters hold the key to the expansion plan of a valuation services firm and to the decision of employing an offshore partner. For example, we at Knowcraft have a seasoned team of over 40 valuation experts, with different skill sets dealing with basic to complex valuation and consulting engagements. Further, the variety and scope of our offerings make us a “one-stop-solution” partner to valuation services firm.
Customization and Scalability
It is very critical to offer services that are attractive to a valuation services firm. What sets Knowcraft apart, is its ability to customize offerings based on clients’ specifications and requirements. The offshore partner must have the ability to seamlessly scale its business in line with client requirements without compromising on the quality of work. This in turn gives the valuation services firm confidence to look for avenues to grow business. In this context, Knowcraft has not only helped its clients to grow their business by 30% – 50% on annual basis, and also ensured sustainability during multiple revamps in the team composition of the valuation services firm itself. This has been possible because of our ability to quickly adapt to the clients’ changing needs and the skills to continuously maintain the required quality of work.
It is important that the offshore partner is well aligned to the culture, ethos, goals and objectives of the valuation services firm. A good cultural fit is essential if the relationship expects to achieve optimum results that will serve valuation services firm, its customers and its offshore partner. The senior members at Knowcraft often travel to clients’ premises situated across the US to understand their culture and to be able to inculcate a similar way of working among other team members.
Independent valuations are often the cornerstone of legal judgements in case of disputes. Thus, valuation services firms and their offshore partners must ensure confidentiality and data security while performing a valuation. We at Knowcraft strictly adhere to the policies of signing non-disclosure and non-solicitation agreements with the valuation services providers. We also have the IT audit process in place done by a third party independent consulting firm, which is certified by industry bodies like ISC, ISACA, EC-Council, etc.