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Business Valuation for Expropriation in Kelowna, British Columbia

Court-Accepted, Case-Law-Backed Business Valuations in Kelowna, BC

Eric Jordan, CPPA - International Business Valuation Specialist

Identification and Valuation of Intangible Assets

Regarding the Identification, Transferability, and Valuation of Intangible Assets in Divorce Proceedings

The following independent global institutions provide the empirical foundation for the 68% Intangible Asset Midpoint used in this forensic business valuation for divorce. These authorities confirm two critical realities:

  • Intangible assets now represent the majority of business value.
  • That value is conditional and may or may not survive separation from the operating spouse.

Legacy accounting models (Market, Asset, and Income approaches) systematically fail not only to identify intangible assets, but also to test whether those assets are transferable, durable, or divisible in a divorce context.

Global Empirical Authorities

The World Bank Group
  • In high-income OECD economies, intangible capital accounts for approximately 70%–80% of total economic wealth.
  • This includes human capital, institutional knowledge, operational systems, trust networks, and organizational continuity.
  • In divorce, this establishes that the majority of business value is not physical.
  • The critical legal question becomes whether intangible value belongs to the business entity or to the individual spouse.
  • Valuations that assume all intangibles are divisible overstate value; valuations that ignore intangibles entirely understate value.
McKinsey Global Institute (MGI)
  • Since the 1990s, investment in intangible assets such as software, intellectual property, data, and proprietary processes has grown more than three times faster than investment in physical assets.
  • This supports the weighting of proprietary systems and intellectual property in valuation.
  • However, if these systems reside in the mind, relationships, or personal execution of the operating spouse, they may not be transferable.
  • In such cases, intangible value may collapse upon separation, leaving only tangible or liquidation value.
UBS / Credit Suisse Global Wealth Reports
  • Global asset value now exceeds USD $500 trillion, with increasing reliance on intangible networks of trust, customer loyalty, and experiential continuity.
  • Customer trust must be classified as either institutional or personal.
  • Only institutional trust, attached to the business entity, is divisible marital property.
Organisation for Economic Co-operation and Development (OECD)
  • Knowledge-Based Capital (KBC) is identified as the primary driver of modern productivity.
  • Traditional financial statements hardly detect organizational or reputational assets.
  • This creates a methodological obligation for divorce valuation to use forensic techniques capable of identifying, testing, and stress-testing intangible assets.
  • Such testing must include whether intangible value survives the hypothetical exit of the operating spouse.

Appendix: Glossary of Forensic Valuation Terms

Divorce-Specific (2026)

Knowledge-Based Capital (KBC)

Intangible assets that generate future economic benefit without physical embodiment.

May be enterprise-based (divisible) or personally embedded (non-divisible).

Distinguishing between the two is essential to equitable division.

Stranded Assets (Assets-at-Risk)

Assets that lose value when separated from the operating ecosystem that sustains them.

If the operating spouse exits and the business cannot function independently, assets may become stranded and reduce the business to liquidation value.

Operating Spirit (Going-Concern Core)

The functional DNA of a business, including systems, processes, and customer trust.

Produces earnings above industry norms.

If the Operating Spirit leaves with the spouse, the going concern may cease to exist.

If it remains with the entity, intangible value survives.

Intangible Residual

The value remaining after deducting tangible assets.

May persist, shrink, or collapse to zero depending on transferability and survivability.

Technical Obsolescence Risk (Factor #7)

Risk that a business’s core value driver is being replaced or is overly dependent on a single individual.

Owner-dependence is a form of obsolescence risk.

If the owner exits, business value may disappear.

The Divorce Valuation Paradox

Intangible Value Under Stress

The Scale of Global Assets

As of 2026, approximately 68% of global business value is intangible. In divorce proceedings, that value is frequently overstated, understated, or entirely missed.

The reason is structural: divorce reframes the valuation question from “What did this business earn?” to “What would survive if this spouse left?”

Why Traditional Valuation Approaches Fail in Divorce

Market Approach
Fails where transactions are hypothetical or where the business is effectively unsaleable without the operating spouse.

Asset Approach
Assumes assets retain value independent of operation often false in owner-dependent businesses.

Income Approach
Projects earnings without testing dependency on a specific individual. Where owner-dependence exists, projected income may be illusory.

Forensic Valuation Requires Survivability Testing

Intangible assets cannot be presumed. They must be:

  • Identified
  • Measured
  • Weighed
  • Stress-tested for post-separation survivability

This is the purpose of the Eric Jordan 25 Factors Affecting Business Valuation, applied in conjunction with the 5 Senses Inspection Report.

This methodology does not assume value. It proves or disproves it.

Experience Is Not Optional It Is Functional

Assessing whether a business survives the loss of its operating spouse cannot be done solely from financial statements.

Expert judgment under complexity relies on pattern recognition developed through direct operational experience. A practitioner without firsthand business operation experience may fail to detect fragile, person-dependent value, regardless of credentials.

Evidentiary Consequences in Divorce

A valuation that:

  • Assumes intangibles where none survive, or
  • Ignores intangibles that are transferable

produces inequitable outcomes.

Courts require explainable, testable evidence, not valuation assumptions.

Conclusion

In divorce, business value is not fixed. It may:

  • Increase
  • Decrease
  • Or collapse entirely

depending on whether revenue, systems, and relationships are transferable to the business or remain personally attached to the operating spouse.

Only forensic valuation can distinguish between the two.

Expropriation Act (British Columbia)Kelowna

In British Columbia, the Expropriation Act governs how governments and authorized bodies compensate property owners when land is taken for public use. This includes compensation for affected businesses, not just the land itself.

What the Act Covers for Business Valuation

When a business operates on expropriated land, the Act recognizes that economic value extends beyond real estate. Compensation may include:

  • Market value of the land or interest taken
  • Business losses caused by the expropriation
  • Disturbance damages
  • Goodwill, in specific circumstances

Business Losses Under the Act

The Expropriation Act allows compensation for:

  • Business interruption losses
  • Lost profits directly attributable to the expropriation
  • Relocation costs
  • Temporary or permanent loss of customers
  • Increased operating costs caused by the move

These losses must be reasonable, provable, and causally linked to the expropriation.

Goodwill & Going-Concern Value

If a business cannot reasonably relocate, the Act allows compensation for loss of goodwill. This is where business valuation becomes critical.

Valuators assess:

  • Whether the business is a going concern
  • Whether goodwill is site-dependent
  • Whether the business can continue elsewhere without material loss

Role of Business Valuation Experts

In BC expropriation cases, valuation professionals are typically engaged to:

  • Quantify lost profits and business interruption
  • Value goodwill and intangible assets
  • Separate real estate value from business value
  • Provide court-defensible valuation reports

These reports are often used in:

  • Negotiations with the expropriating authority
  • Mediation
  • Supreme Court of British Columbia proceedings

Key Principle

The guiding principle of the BC Expropriation Act is to put the owner in the same financial position they would have been in had the expropriation not occurred.

Business valuation is essential to achieving this especially where the business itself suffers economic harm beyond the land taken.

In Simple Terms

  • Business valuation is recognized under BC’s Expropriation Act
  • Compensation is not limited to land value
  • Business losses and goodwill can be claimed
  • Strong, defensible valuation evidence is critical
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