Grand Prairie Business Valuation $1,500 to $15,000- Appraisal, business valuation, income valuation, business evaluation, Grand Prairie.
Certified by Eric Jordan, CPPA - Tax issues, divorce or sale. Valuation for divorce proceedings.
Business Valuation $1,500 to $15,000 Appraisal for Business Sale, Business Purchase, Partnership Issues, Share Value, CRA and Tax Issues, Support for Divorce Settlement.
Grand Prairie 1 800 606 0310 eric@pin.ca
BUSINESS VALUATION AND APPRAISALS
CERTIFIED BY ERIC JORDAN, CPPA
Fees: $3,500 to $5,000 - Avg
Quote: In 4 hours.
Time: 7 to 14 day turnaround.
Court: Win example. Source
Grand Prairie 1 800 606 0310
Canada Wide
(604) 998-2270
/(416) 639-6127
/ (780) 665-1350
/ (403) 910-1234
/ (613) 319-8535
/ (778) 350-7088
HOW MUCH MONEY ARE YOU WILLING TO
LEAVE ON THE TABLE?
1. INTANGIBLE ASSETS CAN NOW BE MEASURED.
The largest part of your small business value is “intangible assets” not included in your current accounting
records. Unfortunately this means your intangible assets are generally ignored in the old method of valuation;
AT GREAT PERIL TO THE STAKEHOLDERS. (see chart below)
We can now value 100% of both your tangible and intangible assets.
1 800 606 0310
eric@pin.ca call now or scroll for more info.
Computers and the Internet changed everything about intangible and tangible assets.
The valuation industry has ignored these facts.
Ocean Tomo, an intellectual property merchant bank with headquarters in Chicago states that:
"Intangible assets are now responsible for 90% of all business value."
- Intangible assets in 1975 = 17%
- Intangible assets in 1985 = 32%
- Intangible assets in 1995 = 68%
- Intangible assets in 2005 = 80%
- Intangible assets in 2015 = 84%
- Intangible assets in 2020 = 90%
Your SMALL BUSINESS likely has 50% to 95% intangible assets.
Will you risk your Intangible Asset value?
The World Economic Forum suggests that 87% of business value is intangible assets: Source
THERE ARE 2 SERIOUS ISSUES WITH THE CURRENT BUSINESS VALUATION INDUSTRY:
(1) The old accounting based valuation industry has trouble understanding and measuring intangible assets as this is a skill set based on long term business ownership and hands on dealing with issues of ownership. NOT AN ACCOUNTING EXERCISE.
(2) The old accounting based valuation industry, with lack of a way of measuring intangible assets, has gone heavy on incomplete intangible asset data.
I have a whole comparison chart on my website showing how incomplete their data is for the purpose it is being used.
Will you risk your valuation to these irregularities?
The International Valuation Standards Council (IVSC) where the largest business valuation
group in Canada is a leading member; has recognized the serious deficiency in understanding intangible
assets across the industry.
They sent an email September 14, 2021.
“Despite the importance of intangible assets to the capital markets, only a small percentage are
recognised on balance sheets, typically via acquisition from a third-party transaction.” Source
“In order to support public discussion on this topic the IVSC is publishing a multi-part article series exploring certain fundamental questions in this area.”
Really! 15 years late they are starting to ask questions.
One might suggest courts and clients have been badly mislead since 2005 when the
UNDER MEASURED Intangible Asset portion of business value reached 80%.
There are over 217,000 members in Canada and internationally who hold the Canadian
CPA designation.
Thankfully less than 2% of CPA’s engage in business valuation where things seem to have gone sideways.
More than 98% chance your accountant is one of the good guys who sticks to accounting.
2. Methodology
- For the last 15 years, Eric Jordan’s valuations have focused on the intangibles.
- His “25 Factors Affecting Business Valuation” model is way ahead of the curve here. This means that Eric’s clients have benefitted from the strong intangible asset valuation focus this 25-Factor approach provides.
- Each of Eric’s Valuation Reports not only details intangible asset value, but can also be supported by key Position Papers that dig deeper into the key factors impacting your valuation.
By asking and answering the key intangible asset valuation questions well before other valuers start to address the issues, Eric believes that his foresight, level of professionalism, and client service in relation to determining intangible asset value for business valuation is unmatched in the industry.
25 FACTORS AFFECTING BUSINESS VALUATION
Position Papers:
Utility, Sustainability, and Scalability
Cumulative Value of Marketing, Brand, and Advertising
Cumulative Value of Research and Development
Cumulative Value of the Workforce - Key Employees, Management, Regular Employees, and Contractors.
Value of the Client Base.
The Position Papers provide real world proof, with examples, that the factors are real and important within the business valuation. Colour bars connect the Position Papers to the relevant Factors.
| 1. Purpose |
| 2. History |
| 3. Financials |
| 4. Return on Investment (ROI) |
| 5. Liquidity |
| 6. Cost of Liquidation |
| 7. Hard Assets |
| 8. Utility, Sustainability, and Scalability |
| 9. Research & Development (R&D) |
| 10. Processes, Procedures, Systems, and Documentation |
| 11. Shareholder Agreement |
| 12. Management Capability, Workforce, and Intellectual Property |
| 13. Client Base |
| 14. Supply Chain |
| 15. Distribution Network |
| 16. Marketing (Advertising, PR, Brand & Crypto Promotion) |
| 17. Dominance in the market |
| 18. Industry benchmarks (averages) |
| 19. Terms of lease |
| 20. Terms of Sale |
| 21. Minority Interest |
| 22. Special Interest Purchaser |
| 23. Geopolitical considerations |
| 24. Risk |
| 25. Opportunity |
I discuss with clients, in depth, the relevant 25 Factors to find what weight should be given to each factor. As we go through these 25 Factors, other sub factors almost always come up. Examples might be “scarcity” or “timing”. This is where business experience enters into the process. In my experience I have found hundreds of “sub factors”. Most of the people doing these comparable valuations have little understanding of such intangibles. You can’t teach business experience and wisdom in any school and graduates generally compound their miscalculation. One can be 100% sure that the example “sub factor” intangible considerations are not found within “comparable sale price” data.
25 Factors Affecting Business Valuation system generally does not consider comparable business sale price data as a legitimate factor in determining value.
See how Judge Macleod rules in favor of my client and my valuation in spite of the objections of a well known CBV. Source
3. Who is Qualified?
Intangible assets are strategically important, and the largest part of business value.
When using the 25 Factors we think our way through the valuation.
What you get is a “Hands On” or more properly speaking, a “Mind On” valuation by a professional who understands how to use the 25 Factors Affecting Business Valuation system supported by the extensive Position Papers that go with them.
One must turn on the mind and let the 25 factors methodology work.
This is why business valuations based on the 25 factors or anything similar to that should only be done by a business valuator who has had 10 years or more experience in owning and operating a small business, "learning to do by doing" and gaining necessary experience and wisdom. This is experience and wisdom that can never be taught in a course, or at a school?
If you are an seasoned business owner, you understand the skill sets I am referring to.
Who do you want doing your business valuation?
1 800 606 0310
eric@pin.ca 1 (800) 606 0310
Call or Email 24 hours a day. Myself or one of my assistants will be back with you shortly.
Intangibles Matter.
4. These are the implementation steps required by my proprietary and copyrighted system.
Step 1. Analyze the Balance Sheet: For example, it may be that a well-capitalized company has $600,000 retained as required capital in the balance sheet. In this hypothetical case, we would calculate a capital charge of perhaps 6%. or $36,000 against the income of the company. Subject to other factors.
Step 2. Normalize the Financial Statements: Meaning move all the assets to fair market value.
This ensures payments to self or related companies are at fair market value, and if not, then adjust. (Note the capital cost must be deducted)
Step 3. Value Normalized Net Income: This requires determining the multiple to be applied and why? This is where we apply the “25 Factors Affecting Business Valuation” and produce the required valuation that is supported by unique facts related to the company. This is the “utility” of the 25 Factors system that makes it unique, transparent, and so accurate.
5. Eric Jordan (CPPA)
My qualifications are based on 5 points:
a. I am accredited by, and a member in good standing of The Canadian Personal Appraisal Group (CPPA}. The CPPA has more than 700 members from all Provinces. As a CPPA, I am experienced in the valuing of tangible and intangible assets. CPPA’s have been accepted as experts in courts across Canada. One can go to www.canlii.org and in the Document Text search field enter “Canadian Personal Property Appraisers Group” A search here will find at least eight cases for review.
b. My business valuation experience covers approximately 200 valuations incorporating tangible and intangible assets during the period 2013 to 2021 across Canada, including Quebec. Clients are business owners and lawyers spanning most industries including manufacturing, tech, agriculture, retail, wholesale, online, transportation, hauling, trades, the service sector, and crypto and non fungible tokens.
c. My methodology was accepted by Judge Macleod, Court of Queen’s Bench of Alberta document enclosed in a judgment handed down on 9 May, 2017. (See the attached judgment record).
d. I can demonstrate more than 30 years of relevant business experience including determining the value of tangible and intangible assets in various ventures. It is my professional assertion that this experience is an important contributor to the creation and application of my valuation methodology.
e. By building on my relevant business experiences, I produced the proprietary “25 Factors Affecting Business Valuation Model”. This evolved, along with my valuation experience, to be the robust system as it now stands. My most recent addition for valuation consideration was non fungible tokens which is a highly specialized area and evidence of the utility of my approach.
6. Comparable Small Business Sale Prices Are Unreliable.
Brokers and other business valuators seem to believe in the John Chretien version of facts.
“A proof is a proof. What kind of a proof? It's a proof. A proof is a proof. And when you have a
good proof, it's because it's proven”.
-Jean Chretien
“There are three types of lies -- lies, damn lies, and statistics.”
-Benjamin Disraeli
Without a way to calculate intangible assets, valuers typically take the easy way out and use traditional valuation approaches that owe more to accounting standards and data manipulation than to unearthing the realistic value of your business. This is not good for stakeholders.
The vast majority of Business Valuation Firms are relying heavily on “Comparable Business Sale Prices” that may have inadequate information to prove the comparable business is actually comparable.
I am not suggesting business sale price data is incorrect. My concern is the lack of intangible asset depth in the data collected, and the way valuators use business sale price data without knowing if the intangible asset components are truly comparable.
1 800 606 0310
Let me know how can I help you.
eric@pin.ca
NOTE HOW THE INFORMATION GATHERING DIFFERS BETWEEN 25 FACTORS AND THE INFORMATION GENERALLY AVAILABLE IN COMPARABLE SALE PRICE INFORMATION |
|
|---|---|
25 Factors System |
Comparable Sale Price Data |
Intangible Assets |
Intangible Asset Information (Generally lacking depth)
|
History |
History |
Purpose |
Purpose (Generally lacking depth) |
Research and Development |
Research and Development (Generally lacking depth) |
Proprietary Processes, Procedures and Systems |
Proprietary Processes, Procedures and Systems (Generally lacking depth) |
Shareholder Agreement |
Shareholder Agreement (Generally lacking depth) |
Workforce |
Workforce (Generally lacking depth) |
Clientbase |
Clientbase (Generally lacking depth) |
Supply Chain |
Supply Chain (Generally lacking depth) |
Distribution Channels |
Distribution Channels (Generally lacking depth) |
Internet footprint And Social Network |
Internet footprint And Social Network (Generally lacking depth) |
Dominance |
Dominance (Generally lacking depth) |
Knowledge base of both the owner and employees |
Knowledge base of both the owner and employees (Generally lacking depth) |
Industry averages |
Industry averages (Generally lacking depth) |
Terms of lease |
Terms of lease (Generally lacking depth) |
Tools, equipment, and inventory |
Tools, equipment, and inventory (Generally lacking depth) |
Leasehold improvements |
Leasehold improvements (Generally lacking depth) |
Liquidation |
Liquidation (Generally lacking depth) |
Risk and Opportunity |
Risk and Opportunity (Generally lacking depth) |
Leverage |
Leverage (Generally lacking depth) |
Minority Interest |
Minority Interest (Generally lacking depth) |
Special Interest Purchasers |
Special Interest Purchasers (Generally lacking depth) |
Redundancy in management |
Redundancy in management (Generally lacking depth) |
Sale terms |
Sale terms (Generally lacking depth) |
Return on Investment |
Return on Investment (Generally lacking depth) |
Geopolitical Considerations |
Geopolitical Considerations (Generally lacking depth) |
Always taken into consideration
Often never mentioned.
Comparable Sales prices are legitimate factors when one is valuing TANGIBLE ASSETS such as farm machinery, construction equipment, restaurant equipment, and residential housing in areas where there are many recent sales to use for price comparison. But comparable sale prices for business valuations should not be relied upon in my professional opinion.
WHY do the big multinational accounting firms and their followers like to use business sale price data in their valuations for private companies?
Because it is easy money.
Valuation firms buy the “comparable business sale price data”
They have accounting people apply math formulas to the sale data they purchase and VOILA.
This is how many business valuation prices are derived.
Comparable Sale Price adequacy in 1975 might have been acceptable, but certainly not in 2021.
- Intangible assets in 1975 = 17%
- Intangible assets in 1985 = 32%
- Intangible assets in 1995 = 68%
- Intangible assets in 2005 = 80%
- Intangible assets in 2015 = 84%
- Intangible assets in 2020 = 90%
This is why consulting firms should be replacing the accounting firms in the business valuation industry.
1 800 606 0310
Let me know how can I help you.
eric@pin.ca
Public company to public company business sale price comparable data MIGHT be acceptable
for some purposes.
BUT not for small business valuation purposes. How do we know the amount of perception, emotion,
media promotion, and possible manipulation by powerful people and elites that has been calculated into the
public company price?
In my professional opinion using public company sale price data for small businesses or private companies valuation is not
logical, reasonable, or practical if one is interested in accuracy.
I seldom get involved with public company valuation.
Experts suggest Public Company sales compared to private company sales have major flaws such as: market liquidity, profit measurement, capital structure, risk profile, differences in operations and operational control.
Entrepreneur.com Article
Going forward, who believes pre covid comparable business sale information would be applicable for post covid valuations?
Be very concerned if your valuator uses “Comparable Business Sales” from any time period.
A Valuation Report using these nonsense comparables and math formulas can give the reader a warm feeling, but so can wetting your pants, and with a lot less harm.
7. Risk for the client.
- I was recently approached for a quote by an older man from a larger Canadian city.
- His business was almost all intangible assets. (90% Plus)
- I sent him a quote of some $4,850 plus Tax.
- He responded and said sorry but he was hiring a local accounting firm to do the valuation because they could physically walk through his business.
- Did they measure his intangible assets?
If so how? - A lot of risk for the client in an accounting based valuation.
8. Positve client examples.
In March 2021 I did a valuation for a high level public sector psychologist and his wife who had also built a multi million dollar business. They hired me because they felt my system of 25 Factors could more accurately value the business than the other systems that used formulas and comparable sales.
Recent valuations include a $15M Valuation for a Toronto app development company expected to go on the TSX in the next few months.
Some companies have negative value:
I did a valuation for 361,000 shares in a medical research development company. The shares were valued at zero to negative value. This is what my client wrote. Date: Fri, Oct 2, 2020 at 9:05 AM
“Eric, You are the best, I highly appreciate it. Truly cherished your work since it gave me a boost of confidence. To confirm it independently, I did contact one of the renowned lawyers from Toronto and assessed my situation. He strongly suggested that he believes that the shares are worth zero as you have evaluated. He is a well known lawyer and ethical, this serves as a confirmation that your work is exceptional. I will post my review on how satisfied I was with your work once my crazy schedule allows me to do so, you already know that I am always late. So, you were spot on with your evaluation which brings high credibility to your work, you should be proud of it”.
Accounting is past information and good for taxation issues but not necessarily relevant for future Valuation. This is where my “25 Factors Affecting Business Valuation” take front and centre stage.
1 800 606 0310
Let me know how can I help you.
eric@pin.ca
Video explaining my approach to Business Valuation is available on Youtube.
JUDGEMENT SUPPORTING THE BASIS OF THE VALUATION
JUSTICE A. D. MACLEOD, COURT OF QUEEN’S BENCH OF ALBERTA
9. CPPA and Auctioneers.
CPPA stands for Canadian Personal Property Appraiser. This group was formed by a group of mostly AUCTIONEERS back in 1995 so that they could have a formal and documented format to use that followed the Universal Standards of Professional Appraisal Practices that could be accepted in court. Experience was the key factor. Most business people would agree that auctioneers know a lot more about real time, on the ground, tangible asset value, than any other group or profession. I personally held an auction license in the early 1980’s
Nobody would or should go to an auctioneer for tax advice.
JUDGES VALUE EXPERIENCE
Source
The founders of the Canada wide and 700 strong Canadian Personal Property Appraisers Group (CPPA) were both Auctioneers and Court Approved Valuation Experts. I am also a proud CPPA and a former AUCTIONEER.
CPPA EXPERIENCE RECOGNIZED BY COURTS
One can go to www.canlii.org and in the Document Text search field enter "Canadian Personal Property Appraisers Group" When you hit the search button you should find at least 8 cases you can review.
Ontario Court Documentation
10. Meanwhile, what is the rest of the valuation industry doing to address the changes in Intagible
Assets in business valuation?
SLEEPING.
The International Valuation Standards Council would appear to be 10 years late in starting to address Intangible Assets.
IVSC: Information Sent September 2021
In this edition:
- Perspectives Paper: Time to get Tangible about Intangible Assets
- Study: How important are business valuation standards to finance executives?
- Register now to join the IVAS-IVSC Business Valuation Conference 2021
- Professional Insights with Duff & Phelps, A Kroll Business - The evolving valuation landscape
- IVSC Virtual AGM 2021 registration open
- Secondment opportunity: Financial Instruments Valuation
- New study shines a spotlight on the intangible value of the world's largest companies
- IVSC welcomes new representatives to its Membership & Standards Recognition Board
- New and proposed members
- Dates for your diary
Perspectives Paper: Time to get Tangible about Intangible Assets
Intangible assets have long been the engine for value creation in the world’s developed economies. The investment in intangible assets, both internally generated and through acquisition, is critical to an enterprises’ capital allocation process. Similarly, investors’ ability to identify those enterprises best able to translate such investments into long-term returns is equally as critical.
The limitation of current accounting standards to convey value creation and preservation activities is largely because the prevailing value creation strategies that existed when the standards were enacted decades ago, have evolved. As many current business models have evolved over decades, namely, to rely more heavily on intangible assets at the expense of tangible, the standards and the economics have become misaligned. This article series looks to contribute to realigning accounting and reporting standards with the value creation and preservation strategies utilised in modern business models. To do this, we explore key questions that must be addressed, including:
- What should be the goal for an enhanced intangible asset framework? Is the goal to better identify value creation activities for future cash flow estimates, the ability to more accurately measure ROI akin to economic value-added (EVA) principles, and/or the ability to better assess managements’ stewardship of capital?
- What are the intangibles that could be subject to an enhanced intangible asset framework and what investments/costs result in their creation?
- Should an enhanced intangible asset framework be based on 1) enhanced disclosures, 2) capitalisation, or 3) value creation concepts and measurement?
My 25 Factors Affecting Business Valuation addresses all of their concerns.
I would be happy to license my intellectual property and teach my proprietary system. An international consulting company could bring in trainees who had sufficient
business experience; including of course being able to read and interpret financial documents.
Trainees could easily be taught the necessary accounting skills if they were lacking. These trainees would have
10 years of business experience and wisdom necessary to
understand and use my 25 Factors system.
Whatever your needs, my proprietary 25 Factors system will serve you well. Nothing else comes close. I have a lot more than 10 years of business ownership to qualify me for business valuation. Business valuation is not an accounting exercise that can be taught in school. Business valuation requires experience and wisdom that cannot be taught in a course but must be acquired over time through "work". There is no "easy way".
FREE CONSULTATION
Eric was wonderful to deal with. He was very knowledgeable on the topic of business valuations and took the time to listen to my fears and concerns. He asked me questions and gave me sound advice that helped me feel at peace. Eric was honest and wise and I would fully trust his experience. Although Eric didn't need to perform a business valuation for me at this time he listened to my concerns and was honest about the services he offered. Eric also talked to me for a long time getting a scope for my situation and didn't charge me at all for what services he did provide. Thanks Eric. -Amber.
ERA Law
As a lawyer, accurate business and personal property appraisals are often essential to resolve negotiations and formal disputes. I am familiar with the work of Eric Jordan, CPPA, and I would recommend his services to anyone seeking a valuation to resolve a dispute or to purchase or sell a business. -Mark W. Hundleby,Barrister and Solicitor
Just a quick note to tell you that CRA appears to have accepted the evaluation you did regarding my shares, having sent us a "balance owing" letter of $00.00.
We are relieved to have the whole ordeal over with. Thanks so much for all your help and expertise.-Nadine and Fiona
TSX - Fair Value Report
When a small publicly traded TSX listed company needed a report on fair value to meet TSX requirements they turned to Eric Jordan at Pin Services Ltd. You can view the opinion on fair value report as part of the documentation for the Securities Commission.
CrossFit Gym
When Evan Lindsay needed to understand the value of his gym he worked with Eric Jordan. (LINK PENDING) "Working with Eric was a productive experience. He listened, was direct and was transparent, providing great feedback on my business. The final report was professional and conveyed the value that my company had built for the last 5 years. I look forward to working with Eric again in the future and highly recommend his services." -Evan Lindsay, Saskpro CrossFit.
Alberta Treasury Branch
Alberta Treasury Branch needed a business valuation before they could provide Wendy Coombs a business loan for the purchase of another medical clinic business in Calgary. (LINK PENDING) "We recently applied for a bank loan to finance the acquisition of a medical clinic in Calgary Alberta. We have been customers of Alberta Treasury Branch for 18 years and despite having many prior business loans, for the first time ever they required a Business Valuation completed by an experienced business evaluator. Banks are becoming even more risk-averse and the requirements for financing increase with respect to their due diligence. We presented Eric Jordan from Pin Services Ltd. The Alberta Treasury Branch agreed Eric had the experience they were looking for in an evaluator. His business valuation was very thorough and not only did it get us the financing we needed, but it was also very useful in facilitating the negotiations and securing a fair price for our business purchase." -Wendy Coombs CEO, VP Business Development Momentum Health.
Eric Jordan(CPPA)
1 800 606 0310
Let me know how can I help you.
eric@pin.ca
VALUATION EXPERIENCE - ERIC JORDAN
CPPA - Detailed Experience
My name is Eric Jordan. I am a CPPA which means Canadian Personal Property Appraiser. There are over 700 CPPA's across Canada. I specialize in Business Valuations. The Canadian Personal Property Appraisal Group provides members a proper legal structure with which to do valuations. They do not give instruction on anything other than how to use the forms and templates they provide to make a legal appraisal or valuation report. I am providing the following information on my experience because experience is the key ingredient in my credentials and my experience is extensive, relevant and when combined with my proprietary system I describe in the book "25 Factors Affecting Business Valuation" allows me to deliver what many believe to be the most accurate small Business Valuation available in Canada today.
EARLY LESSONS
I was born in 1952 in Southwestern Manitoba. Like many other boys that were born on a farm / ranch I was a member of the local 4H beef club. The Canadian 4-H motto is "Learn To Do By Doing". It was at the age of 12 to 15 that I received my first training in valuing or judging. My 4-H group provided a lot of training in judging cattle. Like business valuation the process involved many factors. I enjoyed this and did well at the judging competitions.
I got started in the construction industry at 16 learning about steel stud framing, drywall, drywall taping, acoustical tile, and other types of ceilings. I took training as an apprentice and at 19 years-old I was a sub trade foreman at the construction of J H Bruns Collegiate in Winnipeg Manitoba.
LEARNING TO LISTEN
I soon started my own business doing textured ceilings. I learned a lot of important lessons while running this business. The most important was learning to listen. I did specialized work. I would texture the ceilings in houses that were occupied as I had perfected a way to do this while protecting all the furniture and accessories in an effective and efficient manner. I would book work over the phone and set up a route that could take me from Manitoba to Alberta and back. One did not want to arrive at a house and find the work was impossible to do or that the owner was not likely to pay on completion. I was successful in that business. The key was to listen, listen, and listen. Asking the right questions and then listening carefully was critical to finding the correct information. Hearing the nuances became easy after a while. This is a very useful tool I use to this day while seeking information in the valuation process.
INTRODUCTION TO SMALL BUSINESSES
It was at about this time I got involved with the advertising business. I did advertising placemats across South Western Manitoba and Saskatchewan. If any of you are old enough and frequented Buddy's Steak Ranch on Albert Street in Regina, SK or Aunt Sarah's Restaurant in Brandon MB. you may remember my placemats with a character called "Prairie Tom" in the middle surrounded by squares of advertising.
I don't believe my creation died when I quit doing the placemats. A short time after that "Coffee News" publication started in Winnipeg, Manitoba and the character they use to this day looks amazingly similar to "Prairie Tom". I believe I at least partially inspired the creation of that very successful publication and I am very happy for that. The placemat advertising business put me into hundreds if not thousands of small businesses where I got to deal with the owners. Great experience for my future valuation career as my eyes were beginning to open as to what really happened in a small business. .
AUCTION BUSINESS - Learning to See
In about the same time period I had a mentor Charlie Salfries who was sure that I should be in the auction business. I ended up doing about six auction sales in 1980 and held an auction license in Brandon Manitoba. This was a real learning experience for understanding value and being able to see and feel how live events work. Nobody understands value better than auctioneers. When the Canadian Personal Property Appraisers Group started in 1995 most of the first members were auctioneers from across Canada.
ONE ON ONE - With Hundreds of Small Business Owners.
The next business I got involved with was the movie business where I owned several rental stores and operated a movie broker business. In those days movies were a sideline to almost any kind of small business. I walked into thousands of small businesses and introduced myself. Hundreds ended up dealing with me. During this two to four hour process of dealing with the client on these video tapes, I really started to learn about what happened in a small business. Not all of the money went into the till. These business owners were happy to have someone to confide in. They would tell me amazing ways they saved on paying tax and all sorts of quirks about their particular business and industry. My experience extended to the US, as I purchased movies from small businesses then leased and sold these movies back into Canada. From this experience I could now understand what really happens on the ground in a small business as compared to what shows in the financials. This was invaluable one on one experiences with hundreds of different business owners across all sorts of industries. One can never learn these things in academia and I have a real edge on those who don't have this type of experience, most especially those situations where bookkeeping is suspect or non existent.
PIN.CA - HELPING BUSINESS OWNERS ADVERTISE FOR BUYERS
Some video clients would tell me that they were selling so I should not leave movies with them as their business would be sold and gone by the time I was back in three months. My experience at that time suggested otherwise and I would ask them to just call me if they sold and leave the movies with a neighbouring business in the town. Two years later the business would often close down "unsold" and there would be an empty building for sale.
This is where I got the idea to set up an Internet showroom or catalogue of businesses for sale on the Internet. I was correct and the Pin.ca website has been successful helping business owners to find buyers for the past twenty years.
VALUATION
Working with hundreds of small businesses, advertising to the market place, I got to understand about valuation. I had a client who was a Chartered Accountant who helped me to understand from the accounting industry viewpoint, how they look at valuing a business. I knew however that that was not the whole story. At about the same time I had a client who was a Resume Broker. He had a formula for getting inside his clients head and finding out what intellectual property they retained in their brain. He would write that into a resume and these people would easily find a job. I knew that same thing would work with a small business. A friend of mine Reid Nunn had spent a long time in the insurance industry and he taught me a lot about risk. Between those three things I was able to start to put the pieces together for doing an accurate business valuation and that was the beginning of the 25 Factors Affecting Business Valuation.
CPPA CERTIFICATION (National Accreditation)
This brings us to 2015. I had a formula and a lot of experience but I lacked the legal structure to present a business valuation to a court. That is when I reached out to the Canadian Personal Property Appraisers Group in London, Ontario. I got certified through them and became a CPPA. Now I had a proper legal structure for doing my business valuations. Canadian Personal Property Appraisers Group teaches you the legal structure you must use to produce a valid Valuation. The CPPA certificate for me now is really a moot point as my experience and the legal structure I use stand on their own.
INCOME VALUATION
For those people who need Income Valuations done, I offer my experience dealing with thousands of small business owners across Canada. Hundreds of these were close business relationships forged over time. This combined with my credentials should put me at the top of any list for an INCOME VALUATION.
BITCOIN AND INTANGIBLE ASSETS
By 2013 I had my valuation process fairly well in place and had spent thousands of hours researching intangible assets which I felt were the most valuable part of a small business. I was doing business valuations and I decided to test my process on the toughest intangible asset in the world "Bitcoin"
I purchased 78 Bitcoins and proceeded to test.
My process led me to believe the key element in Bitcoin was the "blockchain" and for the reason of the blockchain, I deemed that Bitcoin would have value in the future. I predicted $500 Bitcoin, $1,000 Bitcoin and the real possibility of much higher. I think everyone can agree my analysis was correct and Blockchain has proven valuable.
CRYPTO AND BLOCKCHAIN APPLICATIONS INCLUDING PROMOTION
Crypto and blockchain applications are emerging as disruptive factors in some business sectors and companies. Understanding where blockchain applications could be employed within a business is uncommon in 2021 and largely unknown outside of Venture Capitalist circles.
Herein lies the advantage.
As with websites and online selling twenty years ago, early blockchain adopters in business will gain dominance over the less agile companies. Does anyone in Canada remember Sears?
If Crypto matters in your company and your valuation (past, present, or future), a valuator that understands crypto and blockchain is vital.
Experience is the key factor. I have done hundreds of business valuations and my valuations have been accepted by CRA and Court of Queen's Bench. Numerous divorce proceedings across Canada have been concluded using my valuations, and filed with the courts. (including Quebec)
Profiles of some of our previous clients:
- Multi Million Dollar Distribution Business- Valuation for purpose of sale.
- Plumbing and Gas Business- Valuation for purpose of divorce proceedings.
- Multi Million Dollar Eco Tour Business- Valuation for purpose of expansion loan.
- Law Practice- Valuation for purpose of sale.
- Lawn and Yard Maintenance business- Valuation for purpose of divorce proceedings.
- Art Studio Franchise- Valuation for accounting purposes and CRA requirements.
- Plumbing Business- Valuation for purpose of divorce proceedings.
- Irrigation and Snow Removal Business- Valuation for purpose of divorce proceedings.
- Large Retail Bakery- Valuation for purpose of sale to employee over 5 years.
- Software Distribution rights in Canada- For Australian Parent Company (Agency Dispute.)
- Janitorial Supply Business- Valuation for purpose of partnership dispute.
- Tree Pruning and Lawn Business- Valuation for purpose of sale.
- Battery Distribution Business- Valuation for purpose of sale.
- Software Testing and Quality Assurance Company- Valuation for purpose of partnership dispute.
- Blind Manufacturing and Installation Company- Valuation for purpose of legal action in partnership dispute. This went to court on May 27, 2016 and resulted in our client receiving over 80% of the amount he sued for.
Client is available as a reference. - Classic Car Renovation Business- Valuation for multi-million dollar lawsuit in Florida launched by Canadian partners.
- Dance Studio- Valuation for purpose of establishing value for pending sale.
- Cross fit GYM- Valuation for purpose of establishing a viable price for buyer to offer.
- Jim's Burger Location in US- Valuation for purpose of divorce proceeding.
- Two Wholesale Bakeries- purpose of the valuation was to find values so the companies could merge.
- Sign Manufacturing Business- Valuation for purpose of a minority shareholder leaving company.
- Landscaping and Excavating Company- Valuation for purpose of divorce.
- Day Care Facility- Valuation to support litigation and negotiation for damages inflicted by City in zoning error.
- Accommodation Business- Valuation for purpose of sale.
- Smoker Operation (8 pigs at a time in size)- Valuation for tax purposes.
- Flooring Business- Valuation for purpose of sale.
- Retail Wine Business (Franchise concept)- Valuation for purpose of sale.
- Prop Business- Valuation for purpose of partnership buyout.
- Computer Retail- Valuation for purpose of potential purchase.
- Music Composer Business (original soundtracks for documentary movies and videos)- Valuation for purpose of divorce proceedings.
- Two Pharmacy Locations- Valuation for purpose of sale consideration.
- Luxury Bed and Breakfast combined with Events Business- Valuation for the purpose of sale.
- Pool Building Company- Valuation for purpose of sale to family.
- Automotive Related Business- Valuation for purpose of sale.
- Specialized Manufacturing Firm within Printing Industry- Valuation necessary as someone expressed interest in purchase.
- Daycare- Valuation for purpose of possible sale. (Interested Purchaser came forward.)
- Focused Builder- Valuation for purpose of establishing value for employee buy in.
- Software Maintenance Contractors- Valuation for purpose of possible merger, (many millions of dollars.)
- Chiropractic Practice - Valuation for purpose of buy in.
- Wholesale Food Business- Valuation for purpose of settling partnership dispute.
- Accounting Firm- Valuation for purpose of divorce.
- Call Centre- Valuation for internal purposes.
- Hair Salon- Valuation for purpose of employee buy in.
- Convenience Store and Gas- Valuation for purpose of lease dispute.
- Specialized Builder of Restaurants- Valuation for purpose of employee buy in.
- Wholesale Food Manufacturing and Distribution- Valuation for purpose of partnership buyout.
- Retail Sporting Goods Franchise- Valuation for purpose of purchase.
- Diesel Repair Shop- Valuation for purpose of partnership dispute.
- Cellular Repair Company- Valuation for purpose of internal planning.
- Roofing Company- Valuation for purpose of partnership consideration.
- Upscale Personal Services Company- Valuation for purpose of internal planning.
- Specialized Wheel Business- Valuation for purpose of sale.
How Financials Can Be Deceiving:
(This is the kind of practical solution offered by our system.)
Accounting for tax purposes is totally different than interpreting financial statements for Business Valuation Purposes. Let us give you just one example: (Think Partnership or Divorce)
For tax purposes R&D is an expense in the year the R&D occured. For the purpose of an accurate valuation the R&D should be amortized over more appropriate period. R&D may be in fact cummulative. HUGE DIFFERENCE
The financials must be normalized to reflect proper treatment of R&D. If we didn't do this a company could spend 95% (or all) of the profit on R&D and might successfully claim the company to be worth very little for a short period of time. Perhaps not fraud but certainly manipulation, depending upon the purpose. (Divorce or other partnership)
Business Valuator Services Available Across Canada 1-800-606-0310
Eric Jordan, Valuator
When a small publicly traded TSX (Toronto Stock Exchange) listed company needed a report on fair value to meet TSX requirements they turned to Eric Jordan...
Testimonials at bottom of page.
Free consultation.
Call or email now!
1 800 606 0310
eric@pin.ca
JUDGES - LAWYERS - PARTNERS IN DIVORCE PROCEEDINGS
PARTNERS IN BUSINESS DISPUTES - BUSINESS BUYERS BUSINESS SELLERS - CANADA REVENUE AGENCY
Bring the judge a valuation based on experience and logic. WHAT KIND OF BUSINESS VALUATION DO YOU NEED?
FAIR MARKET VALUE - ONGOING OPERATION
FAIR MARKET VALUE - ASSETS IN PLACE BUT NOT OPERATING
ORDERLY LIQUIDATION
ORDERLY LIQUIDATION VALUE OVER TWO TO FOUR MONTHS
INSURANCE VALUATION
Are you insured for replacement costs of rebuilding a business after a loss including Intangible Assets? Have your insurer acknowledge and accept valuation prior to buying insurance.
Value of recruitment and training of a group of employees to the position of cohesively working together as they were prior to the point of interruption, damage or loss.
Value of rebuilding client base to where it was prior to the point of interruption, damage or loss.
Value of reimplementation of systems and procedures in place prior to the point of interruption, damage or loss.
LOANS:
Banks are losing a lot of business these days to lenders who understand intangible assets. Define the value of your intangible assets. If your bank is not considering the value of your clearly defined intangibles you need to find a new lender who is better educated in your business model.
ABOUT US:
The niche we serve is Small Business Valuations with special expertise in understanding intangible assets that are often missed as they don't show up on the Balance Sheet. In addition to Financial Statements I take into account; processes, procedures, value of supply chain, value of distribution network, knowledge base of owner and employees, value of employees (cost of recruitment and training as a group,) value of client base, Internet presence and use, documentation and risk.
The rate of return on the real Normalized Net Income is always the first and last consideration.
Value to who? The bank, the seller, the buyer; our valuations can include more than one.
How to value a Grand Prairie business; the valuation or appraisal is a process. Once we have all of the information we need, via the intake conference, your valuation report will be delivered to you in approximately one week. We refer to our evaluation as a Value Statement.
WE COME AT THIS FROM THREE DISTINCT VIEWPOINTS:
EXISTING ACCOUNTING:
The view from an accounting perspective; relying on the the numbers created by the clients' existing accountant, then finding the real "normalized net income" through a proprietary process.
RISK:
Looking from the insurance viewpoint and assessing risk to buyer.
HUMAN CAPITAL:
From the point of view of a resume broker; assessing the value of the human capital involved in the business.
INTELLECTUAL PROPERTY AND PROPRIETARY PROCESSES:
Understanding, assessing and estimating the intellectual property and proprietary knowledge that is transferred with the business. Change of ownership and management does matter.
INTAKE CONFERENCE:
This is a 2 to 3 hour conference call that can include as many stakeholders as required.
As no two businesses are the same, the questions will vary.
Below is a list of some of the areas that we will cover.
(1) Why: What is the purpose of the valuation?
(2) Who: Value with whom owning and managing the business?
- Your current value with current ownership and management?
- Value with a new business owner with less experience?
- Value with buyer like you with similar business management experience?
- Value with an upscale buyer who has the financial ability to build on what you have accomplished in your business?
- These WHO questions make a huge difference to the final appraisal.
(3) Normalized Net Income: I must understand what questions to ask to be able to determine the real 'Normalized Net Income.' This figure is seldom what you see in your year-end accounting, which is generally calculated to determine the lowest amount of tax legally payable.
- Owners and families are often overpaid or underpaid depending upon individual tax situations.
- What would the owner have to pay someone to fill his/her position in the business?
- There are about twenty more normalizing questions that must be answered and these can be different depending upon the answers given to previous questions. This is where experience counts.
(4) Leasehold Improvements: These need to be covered regardless of whether the building is leased or owned.
It is important that the right questions are asked in any comprehensive appraisal.
(5) Hard Assets: Determining fair market value.
Book value means nothing if we want to know the true value of the business.
- Business Equipment
- Business Inventory
(6) Intellectual Property: Copyright, Proprietary Processes, Business Operation Manuals. These are your operating manuals; the step by step instructions on how to run your business and how to train others to operate your business. This greatly affects value; positively if it you have them and negatively if you don�t have them, and much more negative if it would not be possible for you to have a practical manual that would allow for your business to continue if you were unable to function.
(7) Value of Cash Flow: This is calculated by finding the normalized net income then multiplying it by a ratio determined by risk, opportunity, and the intellectual property affecting the means to produce.
(8) Soft Assets: Do you have intellectual property that has fair market cash value outside of your business?
(9) Risk: What are the possible risks to your business?
No appraisal can be completed without properly understanding risk.
- How long is the business lease?
- Are there reasonable options to extend the lease?
- If the owner of the building also owns the business has the rent been paid at market rates?
- Are you in a one industry area, or is the area changing?
As you can well understand, no computer program, gross sales or other rule of thumb guessing techniques are going to be helpful for you in determining the real value of your business. In fact, these techniques could harm you. Valuation and appraisal is our full time business. We do a lot of business valuations.
Visit our website at www.pin.ca to browse our
business opportunities and homes for sale by owner.
Also visit www.BusinessforSaleRadio.com
REFERRALS / TESTIMONIALS
Computers and the Internet changed everything.
In my professional opinion, because of computers and the Internet, most accountants no longer have the skill
sets to value businesses. Most accountants do not have sufficient relevant experience to measure intangible assets
that make up the bulk of the value of both small and large businesses.
Additionaly what experience do accountants have in valuing tangible assets at anything different than book value?
Few would have auction experience or other relevant experience in measuring hard assets.
It is my professional opinion that currently a large part of the Business Valuation industry in Canada is giving shamefully inaccurate valuation numbers to clients and courts.
This situation did not develop overnight, nor do I believe it was a planned effort to deceive. Computers and the Internet disrupted the valuation industry just as it did the newspaper, yellow page, and taxi industries.
Valuation firms buy the so called “comparable business sale price data”
They have accounting people apply math formulas to the “sale data” they purchase and VOILA.
This is how many business valuation prices are derived.
In my professional opinion these valuations are only as accurate as the data they rely upon.
The data is not incorrect, but in my opinion it generally does not have enough depth for the purposes it is
being used for by business valuators.
The situation developed gradually. As the charts on my website explain, tangible assets made up 83% of value in 1975 but is now only 10%
As you read through my website you will find PROOF FROM MANY SOURCES showing 85% to 90% of the value of \companies on the S&P 500 is INTANGIBLE ASSETS. FACT
IT HAS BEEN MY FINDING THAT MOST SMALL BUSINESSES IN CANADA HAVE 50% TO 95% IN INTANGIBLE ASSETS.
THE GOOD NEWS: There are 217,000 CPA’s registered in Canada and they have a good reputation. Few have been implicated in the ENRON OR WISECARD type accounting scandals. There is even one large accounting firm in Canada that has had zero compliance issues with the Ontario Securities Commission. And I knew one of the founders.
CPA’s in Canada have a good reputation. Statistically there is a higher than 98% chance your local accountant sticks to accounting and understands that accounting is different from business valuation. Your accountant is your friend.
The Valuation Industry in Canada and Worldwide seems to have suppressed intangible asset value amounts in businesses and have done nothing to question OR CORRECT the often incomplete sale price data so heavily used by the Business Valuation industry in Canada and elsewhere; NOTHING.
You can find details on my website of how The International Valuation Standards Council (IVSC) waited 15 years to even START addressing the intangible asset situation. My website shows the information they sent in September of 2021 showing how far behind the curve they are.
Because IVSC is an accountant based organization they are in a tough situation as valuing intangible assets is not an accounting exercise. Intangible asset valuation is an experience based skill set that would be very difficult to learn outside of owning and operating a small business and dealing with the vicissitudes of small business ownership.
The “25 Factors Affecting Business Valuation” addresses the issues the International Valuation Standards Council is facing.
The problem for IVSC is that the 25 Factor valuation system can only be properly used by someone with relevant business experience. Hands-on prior business ownership is almost mandatory. (10 years or more) Someone who has personally faced employee issues, contractor issues, client issues, lease issues, supply chain issues, long term planning issues, short term liquidity issues, payroll issues, marketing, branding, advertising, internet issues including search engine optimization and others, often dealing with many issues at the same time.
FEW ACCOUNTANTS WOULD QUALIFY AND THANKFULLY 98% OF CPA'S DO NOT DO BUSINESS VALUATIONS.
As the experienced valuator goes through the 25 factors, their business experience will instinctively recognize the nuances and know what to ask next. This is not a check off the box or paint by number exercise.
For example Wayne Gretsky could only effectively train accountants to play high calibre hockey if they had Junior or other equivalent hockey experience.
Whatever your needs, my proprietary 25 Factors system will serve you well. Nothing else comes close. I have a lot more than 10 years of business ownership to qualify me for business valuation. Business valuation is not an accounting exercise that can be taught in school. Business valuation requires experience and wisdom that cannot be taught in a course but must be acquired over time through "work". There is no "easy way".
I want to work with stakeholders everywhere to make sure business valuations are more accurate and reliable.
I would be happy to license my intellectual property and teach my proprietary system. An international consulting
company might make a good partner. They could bring in trainees who had sufficient business experience; including
of course being able to read and interpret financial documents. Trainees could easily be taught the necessary accounting
skills if they were lacking. These trainees with 10 years of relevant business experience should have the wisdom
necessary to understand and use my 25 Factors system. The accounting industry could easily be replaced by the
consulting industry for the business valuation field.
1 800 606 0310
Let me know how can I help you.
eric@pin.ca