ASA BV Challenge Exam study plan

ASA BV Challenge Exam · Give each week a clear focus.

8 weeks · About 7 hours per week

Week 1

Business Valuation Fundamentals and Professional Standards & Engagement Acceptance, Scope, and Data Gathering

Outline the valuation process and identify the professional standards (e.g., USPAP, ASA, AICPA) that govern BV engagements.
Explain the purpose and key components of an engagement letter, including scope, assumptions, and limiting conditions.
Differentiate between valuation, calculation, and consulting engagements.
Identify the types of data required for a BV engagement and describe procedures for data gathering and verification.

Create a one-page checklist for engagement acceptance and data gathering.

Week 2

Analyze financial statements to identify non-recurring, non-operating, and discretionary items.
Normalize financial statements by adjusting for owner compensation, related-party transactions, and unusual items.
Compute and interpret key financial ratios and common-size statements.
Assess the quality of earnings and the need for further adjustments.

Complete a normalization exercise for a sample company, documenting at least five adjustments with rationale.

Week 3

Describe the key components of a macroeconomic analysis and their relevance to valuation.
Analyze industry dynamics using Porter’s Five Forces and identify the industry life cycle stage.
Assess the subject company’s competitive position within its industry.
Select appropriate sources for economic and industry data and evaluate their reliability.

Write a 2-page industry and economic analysis for a chosen industry, including a SWOT analysis of a representative company.

Week 4

Explain the income approach and its two primary methods: capitalization of earnings and discounted cash flow (DCF).
Calculate a capitalization rate using the build-up and weighted average cost of capital (WACC) methods.
Project future cash flows and determine an appropriate discount rate.
Apply the DCF method to value a business, including terminal value calculation.
Identify and apply appropriate adjustments to projected earnings for normalization and growth.

Build a DCF model for a sample company, including sensitivity analysis on discount rate and growth assumptions.

Week 5

Compare and contrast the income and market approaches, and explain when each is most appropriate.
Identify and apply the guideline public company method and guideline transaction method.
Select and adjust comparable companies/transactions for differences in size, growth, and risk.
Calculate and apply valuation multiples (e.g., P/E, EV/EBITDA) and reconcile results.

Prepare a market approach valuation using at least three guideline companies, including a reconciliation with the income approach.

Week 6

Explain the asset-based approach and when it is most applicable.
Calculate the adjusted book value of assets and liabilities, including intangible assets.
Identify and apply discounts for lack of control (DLOC) and lack of marketability (DLOM).
Describe the levels of value and how control premiums and discounts affect value.
Apply the income approach to estimate the fair value of intangible assets.

Create a table summarizing discounts and premiums, with a written explanation of the factors considered in selecting each.

Week 7

Apply discounts and premiums to a valuation conclusion, including the reconciliation of approaches.
Explain the requirements for a valuation report and the differences between types of reports.
Evaluate a valuation report for compliance with professional standards.
Integrate all approaches into a comprehensive valuation case study.

Draft a complete valuation report for a case study, including all sections and a reconciliation of value indications.

Week 8

Review and synthesize all domains, focusing on integration and application.
Complete practice questions and case studies under timed conditions.
Identify and address remaining knowledge gaps.
Finalize a comprehensive case study valuation report with all supporting documentation.

Complete a full-length practice exam and score at least 70%, with a review of incorrect answers.

Week 2: Successfully normalize a set of financial statements and explain each adjustment.

Week 4: Accurately calculate a capitalization rate and apply it to value a business using the income approach.

Week 6: Correctly apply DLOM and DLOC in a valuation scenario and justify the selected percentages.

Week 8: Score at least 70% on a comprehensive practice exam covering all domains.