AI and the Evolution of Valuation Practice
Standards do not stand still. That is rather the point of them.
The International Valuation Standards Council reviews and revises its standards on a three-year cycle. The current edition, effective 31 January 2025, represents the most recent iteration of that process. The next cycle is already underway. The draft revisions are now being circulated and debated amongst valuation professionals globally, and what they signal is worth understanding clearly.
For those who instruct valuers, engage their reports in legal proceedings, or rely upon their conclusions in commercial decisions, the direction of those revisions matters. It matters because the profession is responding, in a considered and deliberate way, to one of the most significant pressures it has faced: the growing presence of artificial intelligence (AI) and automated tools in professional practice.
What the Standards Already Say
The current International Valuation Standards are not silent on this question. They address it directly.
The IVS Glossary defines an Automated Valuation Model as a type of model that provides an automated calculation for a specified asset at a specified date, using an algorithm or other calculation techniques without the valuer applying professional judgement over the model, including assessing, and selecting inputs or reviewing outputs.
The consequence of that definition is stated plainly in IVS 105, which governs the selection and use of valuation models. It reads: no model without the valuer applying professional judgement, for example an automated valuation model, can produce an IVS-compliant valuation.
No model without the valuer applying professional judgement can produce an IVS-compliant valuation.
This is not ambiguous. A valuation produced by an automated process, however sophisticated, however apparently persuasive, does not meet the standard. The standard requires the valuer to be present in the process: selecting inputs, assessing outputs, exercising scepticism, and accepting accountability for the conclusion reached.
IVS 105 goes further still. The valuer must understand how the model operates. They must test it for accuracy. They must identify its limitations, document them, and justify them. If they cannot do so to a sufficient standard, the valuation is not IVS-compliant. There is no middle ground.
What the Draft 2027 Revisions Indicate
The draft changes now being debated extend this framework explicitly to cover AI-initiated valuation processes. Mandatory compliance requirements are being proposed that would require valuers to disclose the nature and extent of any technology-assisted process used in producing a valuation, to demonstrate that professional judgement was applied throughout, and to document how any AI-generated output was reviewed, tested, and either accepted or adjusted by a qualified valuer.
The strengthened guidance reflects a broader concern held by many “professional” associations – that increasingly automated service environments risk reducing transparency, impairing the ability to explain how opinions are reached, and obscuring the professional judgement that gives work its integrity and its reliability.
In short, the Council is concerned that automation, if left ungoverned, may produce numbers that look credible without being defensible. And a number that cannot be explained or defended is not a valuation. It is a calculation.
Why This Matters to Solicitors and Family Law Practitioners
If you are a solicitor or family law practitioner who instructs business valuers, these developments reinforce something you already know from within your own professional experiences. Valuation opinions are only as strong as the professional standing behind them.
In contested matters, opposing legal teams now have another layer of problems and will not simply accept a valuation figure. They must probe the methodology. They will question the inputs. They will test whether professional judgement was genuinely applied or whether the report has been assembled with the aid of tools that generate plausible-sounding numbers without the scrutiny those numbers require. A valuer who cannot explain precisely how they reached their conclusion, and why each significant decision was made, is a valuer whose evidence will be challenged. When the court requires clarity and the valuer cannot provide it, the consequences fall on the party they were instructed to support.
A valuer who adheres to the International Valuation Standards provides something that a valuer who does not cannot offer: a framework that is transparent by design. Transparency, explainability, quality control, and disclosure of any technology-assisted process are not optional characteristics under IVS. They are foundational requirements. They are, in the language of the draft 2027 revisions, integral components of valuation governance and valuation risk management.
This is the distinction that now matters when you are selecting who to instruct.
Our Position
At Negotia Group, our practice is grounded in the International Valuation Standards, and it has been from the outset. That commitment is not a marketing position. It is a professional obligation, and we take it seriously.
We are not opposed to technology. We use it where it assists and where it can be properly governed. What we do not do is allow any automated output to substitute for professional judgement. Every conclusion we reach is reasoned, documented, and defensible. We understand our models. We test them. We can explain them. And when a court, a legal team, or a client asks us to justify our methodology, we can do so with precision and without hesitation.
In a landscape where AI tools are being adopted rapidly and often without adequate scrutiny, the willingness to be held to an international standard is not a limitation. It is an important credential.
A valuer who goes on the defensive has something to hide. A valuer who adheres to IVS has something to show.
The Framework That Governs What We Do
The revised international valuation standards, when adopted, will formalise what the current standards already require in principle: that transparency, explainability, quality control, and the proper disclosure of any technology-assisted process are not peripheral considerations in valuation practice. They are the framework within which valuation governance and valuation risk management operate.
For business owners, that means the valuation of your business will reflect a methodology you can understand and, if necessary, defend. For legal practitioners, it means the evidence you rely upon has been produced to a standard that can withstand scrutiny. For accountants and financial advisers, it means the professional you refer your client to carries the kind of credibility that protects your client and your own professional reputation.
Standards evolve because the environment in which we practise evolves. The response within this firm – Negotia – to the challenge of artificial intelligence is measured, evidence-based, and grounded in the same principles that have always governed sound valuation practice. Negotia is not resisting technology. It is ensuring that technology serves professional judgement, rather than replacing it.
That, precisely, is what the International Valuation Standards call for.
~ Kevin Lovewell
If you require a business valuation produced in full compliance with the International Valuation Standards, or if you would like to understand what those standards mean for your matter or your business,
contact Kevin Lovewell directly on 1300 551 757.
Negotia Group provides expert, IVS-compliant business valuations and business brokerage services to SME owners, family lawyers, solicitors, accountants, and financial advisers across Australia.
www.negotia.com.au
