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How the Business Valuation Community Relies on Annual Statement Studies Data: A Q&A with David Fein, CEO of Valusource

In the world of banking, RMA’s Annual Statement Studies is a household name, synonymous with high-quality benchmarking data used to inform sound commercial credit and lending decisions. Outside of banking, Statement Studies is used by a variety of professionals, most commonly lawyers, CPAs, and small business owners looking for data that can help them understand financials in a particular industry.

Given the wide-ranging nature of their work across various industries, business valuators are another group who benefit tremendously from Statement Studies benchmarking data and its ability to establish financial statement standards for small- to medium-sized businesses. For more on how the business valuation industry relies on Statement Studies, we sat down with David Fein, CEO of ValuSource, the industry-leading provider of business valuation software for thousands of CPAs, valuators, and financial professionals worldwide.

First, tell us a bit more about ValuSource.

Since 1986, ValuSource has been a global leader in business valuation software and data. Our solutions automate the time-consuming and complex process of business valuation and damages calculations, and we have relied on Statement Studies data for over 30 years to help make sure our software produces accurate valuations in line with benchmarks for a client’s industry and business size.

Where does Statement Studies fit into the business valuation process?

There are three main business valuation standard setting organizations in the US: The National Association of Certificated Valuators and Analysts (NACVA), the American Institute of Certified Public Accountants (AICPA), and the American Society of Appraisers (ASA). Inside all three of these standards are two basic types of valuation reports: full conclusion of value report and limited calculation of value report. The full reports require financial statement benchmarking against peers, while limited reports may or may not.

The kind of valuations performed by certified valuation experts include divorce, buy-sell, litigation, IRS, financial planning, and more. It’s hard to estimate what percentage of valuation projects contain a financial statement benchmark, but a vast majority of valuators will perform financial statement benchmarking during their practice. In the valuation market, there are a number of sources of financial statement benchmarking data, but most of our clients rely on Statement Studies.

Why do you think Statement Studies has become the preferred source of financial statement benchmarking data for business valuators?

Statement Studies data is 100% transparent, meaning that how RMA collects, processes, and reports the data is documented and published. Valuators appreciate knowing that every number published in Statement Studies can be traced back to actual company financial statements that were submitted by member banks and the aggregation of those statements which are published is based on a process that is documented.

What data from Statement Studies is most useful for business valuations?

In most cases it’s not specific data points that valuators focus on, but rather the overall picture of a company’s strengths and weaknesses. We provide rankings for every common size and ratio data point, making it easier for the valuation expert to get a picture of overall company strengths and weakness. These findings provide evidence for both ongoing cash flow as well as risk.

How do ValuSource software users interact with Statement Studies data?

The valuation community is required by valuation standards to compare a subject company to its industry, and Statement Studies data provides the foundation for this comparison. Users rely on ValuSource software to provide an automated and standardized process to compare their subject companies to Statement Studies data. For example, here’s a step-by-step look at the process (paraphrasing):

  • Step 1: Input company financial statements (potentially normalize statements)
  • Step 2: Select the correct Statement Studies year, industry, and data slice
  • Step 3: Download the data into the valuation project
  • Step 4: Analyze the results of the comparison
  • Step 5: Apply results to valuation assumptions
  • Step 6: Generate valuation report including Statement Studies narrative and results

In closing, what would you describe as the core benefits of Statement Studies for business valuators?

There are many benefits, but I’ll give you my top four. First, Statement Studies is based on actual company financial statement data rather than modeled data. Second, it provides data for the size of companies valuators typically value, which is small- to mid-sized. Third, the data is highly credible due to RMA’s 100-year history compiling the metrics found in Statement Studies. And finally, the data is of the utmost integrity given the transparency of the collection and publishing process.


Want to learn more about how ValuSource partners with RMA to provide its users with reliable financial statement benchmarking data from Annual Statement Studies?  Check out the customer story now.

Business valuation professionals interested in a specialized version of Statement Studies designed specifically for appraisers should check out RMA Annual Statement Studies Valuation Edition. To learn more about RMA Annual Statement Studies overall and how it can help you analyze financial statements with confidence, visit our website or contact your RMA Relationship Manager today!




Statement Studies can enhance
your financial decision making

RMA Statement Studies are a valuable and informative source of industry
benchmark data on small- and medium-sized borrowers,
based on data gathered directly from RMA's member institutions.