Empirical Basis for the 68% Intangible Asset Midpoint

The following independent global institutions provide the empirical foundation for the 68% Intangible Asset Midpoint applied in this forensic valuation. Collectively, these authorities confirm that traditional accounting models (Market, Asset, and Income approaches) systematically fail to identify the majority of modern economic value.

1. World Bank Group

   Primary Reference:
   The Changing Wealth of Nations 2024: Managing Assets for the Future

   Key Findings:
   The World Bank’s Comprehensive Wealth framework demonstrates that in high-income OECD economies, Intangible Capital including human capital, social capital, and proprietary institutional knowledge accounts for approximately 70% to 80% of total national wealth.

   Application to this Case:
   This establishes that the Intangible Residual is the primary driver of economic value. A valuation focused only on tangible assets ignores the largest component of the owner’s property.

2. McKinsey Global Institute (MGI)

   Primary Reference:
   The Rise and Rise of the Global Balance Sheet: How Wealth and Debt Have Grown Faster Than GDP

   Key Findings:
   MGI’s longitudinal analysis confirms the ongoing dematerialization of the global economy. Since the 1990s, investment in intangible assets data, software, intellectual property, and operational systems has grown approximately 300% faster than investment in physical assets.

   Application to this Case:
   This validates Factor #4 (Proprietary Systems) and Factor #15 (Proprietary IP) as high-weight value drivers, confirming that economic value has migrated from physical infrastructure to intellectual systems.

3. UBS / Credit Suisse Global Wealth

   Primary Reference:
   Global Wealth Report 2024 & 2025

   Key Findings:
   These reports document total global assets exceeding USD $500 trillion and identify a structural shift in which non-financial assets increasingly depend on intangible networks connectivity, reputation, and trust to maintain market value.

   Application to this Case:
   This supports the Five-Senses Inspection methodology by demonstrating that customer experience and trust (Factor #25) are quantifiable and defensible economic anchors of private business value.

4. Organisation for Economic Co-operation and Development (OECD)

   Primary Reference:
   OECD Compendium of Productivity Indicators (2025 Edition)

   Key Findings:
   The OECD identifies Knowledge-Based Capital (KBC) as the primary driver of modern productivity and explicitly acknowledges that traditional financial statistics “hardly detect” the organizational and reputational assets responsible for revenue generation.

   Application to this Case:
   This provides the legal justification for forensic intervention. Where traditional accounting fails to identify property, expert methodology is required to satisfy judicial standards of completeness.

Appendix: Glossary of Forensic Valuation Terms

Based on OECD and Global Financial Reporting Standards (2026)

1. Knowledge-Based Capital (KBC)

   OECD Definition:
   Intangible assets that provide future economic benefits, including:

   • Computerized Information: Software and proprietary databases
   • Innovative Property: R&D, patents, trademarks, and original designs
   • Economic Competencies: Firm-specific human capital, networks, and organizational know-how

   Forensic Application:
   This framework captures the “missing” value ignored by tax-based accounting systems.

2. Stranded Assets (Assets-at-Risk)

   Global Standard:
   Assets subject to unanticipated or premature write-downs, devaluation, or conversion into liabilities.

   Forensic Application:
   In expropriation scenarios, physical assets frequently become stranded when the operating environment is removed, reducing their value to salvage.

3. Operating Spirit (Going-Concern Core)

   Forensic Definition:
   The unique operational “DNA” of a business principally the integration of proprietary systems and customer trust that enables sustained returns above industry averages.

   Application to this Case:
   This is the core asset that must be restored to make the owner whole.

4. Intangible Residual

   World Bank Standard:
   The value remaining after subtracting all tangible and natural resource assets.

   Forensic Application:
   This residual is quantitatively measured through factor-weighting rather than assumed goodwill.

5. Technical Obsolescence Risk (Factor #7)

   Forensic Definition:
   The risk that a business’s core value driver is being displaced by superior delivery systems or technologies.

   Application to this Case:
   This distinction determines whether the owner is losing a growth asset or a declining one at the time of taking.

The Scale of Global Assets and the Missing Majority

To understand why expropriation valuations routinely fail to make owners whole, the court must first understand the scale and composition of modern global assets.

Multiple independent sources including the World Bank, McKinsey Global Institute, Credit Suisse Global Wealth Reports, and OECD capital stock studies place the total value of global assets (tangible and intangible combined) in a range exceeding USD $500 trillion. This figure includes real estate, infrastructure, machinery, financial capital, intellectual property, proprietary systems, data, brands, contractual rights, and institutional know-how.

What matters more than the headline number is composition.

Over the last five decades, global asset value has undergone a structural inversion. Empirical studies consistently show that approximately 65% to 75% of total global asset value is now intangible, with 68% commonly cited as the midpoint. This shift is not theoretical; it is observable in public markets, private transactions, pension fund allocations, and sovereign investment behavior worldwide.

In the 1970s, tangible assets dominated enterprise value.

In 2026, intangibles are the value.

Why Traditional Valuation Approaches Systematically Miss the 68%

Failure to Account for or Identify

Despite this global reality, expropriation valuations continue to rely almost exclusively on the traditional Market, Asset, and Income Approaches frameworks developed in an era when physical capital was the dominant value driver.

These approaches often fail for one fundamental reason:

• The Market Approach: Relies on comparable sale prices that seldom, if ever, meet the “fair market value” requirement of “without compulsion to buy or sell.” rendering the market approach the most unreliable of all.
• The Asset Approach: Measures what can be seen, touched, and depreciated but cannot identify proprietary systems, operational intelligence, customer trust, data rights, or embedded process advantages associated with them.
• The Income Approach: Projects historical earnings without forensically testing why those earnings exist, how fragile they are, or what it would cost to rebuild them if disrupted.

As a result, the largest category of modern property intangible assets is either ignored, collapsed into residual goodwill, or omitted entirely.

When 68% of value is missing from the analysis, the result is not a conservative valuation.

It is a flawed number.

Forensic Valuation Requires Identification Before Quantification

Intangible assets cannot be valued by assumption.

They must be identified, measured, weighed, and stress-tested.

That is the function of my proprietary 25 Factors Affecting Business Valuation, applied together with the 5 Senses Inspection Report. This combined methodology was designed specifically to bridge the gap between accounting outputs and economic reality by forensically isolating the intangible drivers that actually generate and sustain value.

Experience Is Not Optional It Is Biological

Modern forensic valuation also requires something traditional models cannot supply: experienced expert judgment.

Over 50 peer-reviewed scholarly studies in neuroscience, aviation safety, and surgical decision-making confirm the existence of the Gut-Brain Axis a biologically validated second decision system developed only through long-term, high-stakes hands on experience. Commercial pilots and surgeons rely on it because pattern recognition under complexity cannot be reduced to formulas alone.

An expert who has never long term owned and operated a business at ground level may lack the biological hardware required to detect intangible value no matter how sophisticated their spreadsheet.

My methodology integrates this validated expert intuition with structured forensic factors, producing conclusions that are explainable, testable, and defensible under cross-examination.

The Evidentiary Consequence in Expropriation

When an expropriation valuation fails to identify and value the intangible core of a business, the issue is not academic. It is legal.

A valuation that can’t identify the majority of the owner’s property cannot satisfy the common-law requirement that the owner be made whole. It presents a number but without an explanation to know if it is true.

That gap is precisely where courts require expert evidence.

Exhibit A: The Anatomy of a Valuation Failure

A True Story of the “Missing 68%”

Within the last two years, I was called to inspect a small, family-run convenience store in a Canadian city. On the surface, an accountant would see a simple retail lease. Through the lens of a 5-Senses Inspection, I saw a 30-year “Intangible Fortress” that the city was about to dismantle for cents on the dollar.

The Forensic Reality vs. The Legacy Offer

The city offered the owner $100,000, treating the business as a collection of shelving and old financials. My valuation, applying the 25 Factors Affecting Business Valuation, was $528,000.

Why the “Big Three” Approaches Failed This Family

• The Failure of the Asset Approach (The “Iron” vs. the “Intelligence”)
  The city told the owner he could “keep his inventory.” This is a classic Asset Approach error.
  Forensic Reality: Without the Location-Dependent Monopoly (Factor #19), $70,000 in inventory isn’t an asset it’s a storage liability.
  5-Senses Insight: The value wasn’t in the products themselves, but in the Proprietary Process (Factor #4) of how they were marketed to a specific, 30-year loyal customer base that could not be moved.
• The Failure of the Income Approach (Ignoring the “Operating Spirit”)
  The city’s offer ignored the owner’s recent investment: a 500-square-foot renovation for a new cell phone accessories division.
  Factor #22 (Future Viability): Traditional models value the past. Forensic valuation values planned expansion and the infrastructure for new revenue streams.
  Factor #1 (Leasehold Rights): With eight years remaining on a stable lease, the owner held a contractual intangible asset that provided a predictable “toll-gate” on local commerce.
• The Failure of the Market Approach (The “Compulsion” Fallacy)
  The city made it clear they would “outlast” the owner financially in court.
  Violation of FMV: Fair Market Value requires parties acting without compulsion. The moment time is used as a weapon, the Market Approach becomes legally and ethically void.
  Factor #25 (Customer Trust/Goodwill): You cannot “comparably sell” 30 years of neighborhood trust. It is a non-transferable intangible that must be compensated as a loss of going concern, not a real estate transaction.

The Biological Verdict: Why the City “Couldn’t See” the Value

The city’s appraisers looked at the spreadsheet; they didn’t look at the business. They lacked the Gut-Brain Axis the biological hardware developed over decades of ground-level operation to “sense” the fragility of this family’s ecosystem.

They saw a “convenience store.” I saw:

• 30 years of localized data (Factor #15)
• A strategic leasehold stronghold (Factor #8)
• A high-velocity expansion model (Factor #22)

The Result: Faced with a legal machine that refused to acknowledge the 68% intangible core of his life’s work, the owner was forced to accept $100,000 to save his family from bankruptcy.

Conclusion

This is not just a story of a low offer; it is a story of evidentiary blindness. When a valuation methodology cannot identify the factors that actually generate revenue, it doesn’t just miss the mark it violates the law’s requirement to “make the owner whole.”

The Death of Asset, Market, and Income Approaches: 4 Professional Paradigm Shifts

Presenting an “Accountant’s Multiple” in a 2026 courtroom is the evidentiary equivalent of offering eyewitness testimony when DNA proof is available. We have moved from “Rules of Thumb” to Forensic Precision:

• From Rules of Thumb to Stress Testing: Like modern Engineering (FEA), the 25-Factor Stress Test identifies invisible fractures in a company’s intangible core that traditional multiples ignore.
• From Square Footage to Forensic Modeling: Accountants value a business on square footage (the balance sheet). Forensic valuation values the cost to rebuild the revenue stream, capturing the 68% intangible gap.
• From Eyewitnesses to DNA: An accountant’s multiple is subjective testimony. The 5-Senses Inspection Report is operational “DNA proof.”
• From Sampling to Total Oversight: Instead of sampling year-old financials, the Gut-Brain Axis (supported by 50+ scholarly papers) enables total forensic oversight of the operation.

The Biological Defense: The Gut-Brain Axis

This is not just data; it is the Neuroscience of Expert Intuition. It takes 10 to 15 years of hands on experience to develop the Gut Brain Axis that gives pilots, surgeons and others instinctive knowledge. Over 50 scholarly papers support the Gut-Brain Axis the biological reality that veteran experts develop as a “Second Brain.” Take a look at our “Experience” Link

An accountant who has never on a long term basis owned and operated a business lacks the biological hardware to “sense” value. My methodology merges this validated instinct with 25 forensic factors to provide a level of accuracy that legacy models are physically incapable of achieving.

Our Disruption Is Not the First in History and It Is Often Slow

• Medicine: Traditional/Physician Monopoly vs. Evidence-Based + Alternative/Forensic Approaches (Late 19th–20th Century)
  Dominant group: The American Medical Association (AMA) and licensed physicians built a near-monopoly via state licensing laws (~1870s–1910s), restricting entry and marginalizing “unscientific” practices.
  How it was disrupted: Evidence-based methods, randomized trials, public health data, and regulatory shifts; forensic experts gained ground in courts/litigation for more accurate diagnostics.
  Parallel: GAAP-based conservatism can hide intangibles; forensic/experiential methods force transparency and better truth in court, gaining acceptance as evidence proves outcomes.
• Pharmaceuticals/Drug Pricing: Patent/Industry Monopoly vs. Generic + Value-Based Pricing (1980s–Present)
  Dominant group: Big Pharma used patents and lobbying to control pricing/innovation, extending exclusivity via “evergreening” and pay-for-delay.
  How it was disrupted: Generic entry (post-Hatch-Waxman 1984), value-based pricing, outcomes data, and regulatory pushback (e.g., Inflation Reduction Act 2022).
  Parallel: Historical-cost/tangible valuation “monopolizes”; forensic intangible focus mirrors value-based approaches that expose overreach in disputes.
• Telecommunications: AT&T Natural Monopoly vs. Deregulation + New Tech (Pre-1980s → Post-Breakup)
  Dominant group: AT&T held a government-sanctioned monopoly (patents + regulation) over phone service/equipment.
  How it was disrupted: Antitrust breakup (1984) plus superior technologies (fiber optics, cellular, internet protocols) and competition.
  Parallel: Standardized valuation methods hold sway; forensic methods disrupt by proving better “make whole” results, with gradual acceptance over time.