Valuing More Than the Balance Sheet

Understanding a company’s history, leadership, and future matters as much as financial statements.

Donny Shimamoto opens a recent episode of Accounting ARC with a simple question: How do you value a business when the numbers tell only part of the story?

His guest, Baria Jaroudi, a Houston-based director in BDO’s business valuation and advisory practice, says valuation work requires more than reviewing financial statements. It requires understanding how owners built the business, where cash flow comes from, and what risks and assumptions shape a credible and defensible value — especially in family law and divorce matters, where the stakes can run high.

“I like to think of myself as someone who brings clarity and calm in moments that can otherwise feel overwhelming,” Jaroudi says.

Shimamoto, founder and managing director of IntrapriseTechKnowlogies LLC and founder and inspiration architect for the Center for Accounting Transformation, says that role reflects a core purpose of the profession: accountants deliver peace of mind. In Jaroudi’s work, that means translating complex analysis into conclusions clients can understand — and conclusions that can withstand scrutiny.

What makes business valuation different
Jaroudi describes business valuation as one of the most nontraditional specialties within accounting. While audit work focuses on verifying financial statements and tax work centers on compliance, valuation asks a different question: What is the business actually worth?

The answer requires more than a formula.

“You’re looking at the story behind the numbers,” Jaroudi says. “You’re trying to understand the operations, the decisions and what the business owner has built.”

Two companies with identical revenue can have dramatically different values depending on factors such as cash flow, risk profile, customer concentration, management depth, and industry trends.

Valuation professionals often begin by establishing a “floor value” using the balance sheet. That process involves adjusting assets and liabilities to their fair market values to determine what owners would receive if the business were sold and debts were paid.

But the analysis does not stop there.

Valuation also looks forward, examining the company’s expected future cash flows and the value those flows may generate for owners over time. Professionals also compare the business to similar companies that have recently sold, analyzing transaction multiples based on revenue or earnings.

Once those approaches produce preliminary estimates, valuation specialists step back and test the conclusions.

“Then we look at everything again and ask, ‘What makes sense?’” Jaroudi says.

If the different valuation methods produce conflicting results, it signals that more analysis may be needed.

Objectivity matters
One principle guides the entire process: independence.

Jaroudi says valuation professionals must remain objective even when clients have strong incentives to influence the outcome. For example, an owner preparing an estate transfer may prefer a lower valuation to reduce taxes. In divorce proceedings, each side may argue for different numbers.

Valuation professionals do not advocate for a party, Jaroudi explains. They support their own independent opinion.

“We need to be able to take a position that we can support,” she says.

That independence is critical when valuation conclusions may be challenged in court or reviewed by regulators.

A second career — and a different path
Jaroudi’s journey into the profession did not follow a traditional path.

Before entering accounting, she spent 10 years working as a Montessori teacher while raising her children. Although she originally studied accounting in college, she did not pursue the profession until later.

In 2008, she decided to return to accounting and began studying for the CPA exam — despite having no accounting work experience and graduating more than a decade earlier.

The challenge was even greater because she originally studied accounting in Arabic and had to relearn much of the material in English.

She describes the experience as moving a mountain “one rock at a time.”

After passing all four sections of the CPA exam, Jaroudi joined a local firm where she was introduced to business valuation. She quickly discovered that the work suited her curiosity.

“No two businesses are the same,” she says. “You really have to put on your thinking hat every time.”

Her teaching background also proved valuable. Jaroudi says she enjoys breaking down complex concepts so clients understand not just the results, but the reasoning behind them.

That ability aligns closely with what Shimamoto says accountants are ultimately hired to do: make sense of a complex and changing financial world.

Real-life superheroes
Shimamoto often asks podcast guests to reflect on the idea of accountants as “real-life superheroes” for their clients.

Jaroudi says the role has less to do with technical expertise than with consistency and empathy.

“Showing up consistently and listening deeply makes a difference,” she says.

That mindset is especially important in emotionally charged engagements such as divorce valuations. Although she initially hesitated to work in that area, she eventually recognized the importance of helping people navigate difficult transitions.

“Someone has to do the work, and it needs to be done right,” she says.

Her approach focuses on listening carefully while maintaining professional objectivity.
(Editor’s Note: Share your superhero powers as an Agent of Transformation and inspire the next generation of accounting leaders.)

Why sharing stories matters
Jaroudi says telling stories like hers can help address one of the profession’s biggest challenges: the accounting talent pipeline.

“If we want a diverse and dynamic future in accounting, we need people to step up and be visible,” she says.

Hearing different career paths can help others see that the profession offers more possibilities than they might expect.

“It’s never too late,” she says. “If someone else can do it, you can do it too.”

Jaroudi hopes that by sharing her journey — from classroom teacher to valuation specialist — she can inspire at least one person to pursue a new direction.

“If one person hears this and decides to make a change,” she says, “then that’s purpose served.”

Listen to the full episode