Business Valuation and Divorce Business Valuation in Red Deer, Alberta
Court-Accepted, Case-Law-Backed Business Valuations in Red Deer
Eric Jordan, CPPA
International Business Valuation Specialist
I welcome being cross-examined as an expert witness for the court in Red Deer.
Fee Range: $1,500 – $15,000 | Basic Average: $3,500
Free 15-minute introductory consultation with a ballpark business valuation estimate for Red Deer businesses.
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.
The Family Law Act (Alberta) Business Valuation Perspective
- What the Family Law Act is (and is not)
Alberta’s Family Law Act (SA 2003, c. F-4.5) is a provincial statute that governs many of the legal consequences of family relationships, particularly parenting, guardianship, support, and family violence remedies. Its purpose is not to determine whether a marriage or relationship has ended, but to regulate rights and obligations arising from family relationships.
From a business valuation perspective, the Family Law Act matters primarily because it intersects with support claims and income determination. However, property division itself is governed by Alberta’s Family Property Act, not the Family Law Act.
The Family Law Act governs:
• Child support and spousal/partner support (often income-driven)
• Guardianship, parenting, and contact
• Adult interdependent partner relationships
• Support enforcement and variation
• Family violence and protection orders
The Act does not govern: Division of property between spouses or partners that regime is found in the Family Property Act (Alberta). Divorce itself remains a federal matter under the Divorce Act.
- When the Family Law Act matters to a valuator
The Family Law Act matters when there is a claim for support (child or spousal/partner support) arising from the breakdown of a relationship in Alberta.
For valuation professionals, the trigger is not divorce, but a support claim requiring income analysis, particularly where one party earns income through a business.
Critically:
• Divorce is not required
• Married and adult interdependent partners may both generate valuation engagements
• Many valuations occur pre-litigation or during negotiation
The focus is typically on income, not capital value, although business value may still be relevant indirectly.
- Married vs. adult interdependent partners (valuation consequences)
Alberta recognizes both married spouses and adult interdependent partners (AIPs). For valuation purposes, the distinction affects property division under the Family Property Act, but support analysis under the Family Law Act is similar.
Married spouses:
• Support claims may arise under the Family Law Act or the Divorce Act
• Business income is relevant to support
• Property division is governed separately by the Family Property Act
Adult interdependent partners:
• Support claims arise under the Family Law Act
• Business income remains central to determining ability to pay
• Property rights depend on Family Property Act applicability
Practically: valuation work under the Family Law Act usually focuses on income determination, regardless of marital status.
- Support as the core valuation driver
Unlike Ontario’s equalization regime, Alberta does not use Net Family Property equalization under the Family Law Act. Instead, valuation work is driven by support entitlement and quantum.
For valuators, the key question is: “What income is truly available from the business to pay support?”
This often requires reconstructing financial reality beyond reported tax income.
- Business interests under the Family Law Act
Business interests are relevant under the Family Law Act because they generate income, not because they are being divided.
Common business structures encountered:
• Private corporations
• Professional practices
• Partnerships
• Sole proprietorships
• Holding and management companies
Key valuation realities:
• Legal ownership does not control income attribution
• Courts may impute income where reported income understates capacity
• Share structure, retained earnings, and expense discretion matter
• Non-arm’s-length transactions are closely examined
• Business cash flow often matters more than business value
- The family home (limited valuation role under the FLA)
Under Alberta law, the family home is primarily relevant to property division under the Family Property Act, not the Family Law Act.
From an FLA perspective:
• The home may affect housing costs and needs
• It may influence support quantum or hardship arguments
• It does not drive income determination directly
For valuators, the home usually plays a secondary role, unlike Ontario’s matrimonial home rules.
- Income vs. value (where the Family Law Act and Divorce Act intersect)
The Family Law Act is support-focused, so valuation engagements frequently overlap with income analysis under the Divorce Act (for married spouses).
Common valuation tasks include:
• Normalization and add-backs
• Owner compensation analysis
• Salary vs dividends vs retained earnings
• Identifying personal expenses run through the business
• Assessing sustainable income for support
Often, the valuator is asked: “What income should be used for support purposes?” Not: “What is the business worth to divide?”
- Agreements and contracts (valuation modifiers)
Domestic contracts (cohabitation agreements, marriage agreements, separation agreements) can modify how support obligations apply under the Family Law Act.
Agreements may:
• Fix income assumptions
• Limit or waive support
• Prescribe valuation or income-determination methods
However, contracts may be challenged for unfairness, nondisclosure, or flawed financial assumptions making valuation evidence critical.
- Why the Family Law Act matters to valuators in Alberta
The Family Law Act is a valuation “battlefield” not because it divides property, but because it governs ongoing financial obligations driven by income.
It determines:
• Whether income must be reconstructed
• Whether income can be imputed
• How business earnings affect support
It does not determine: How business value is divided (that is Family Property Act territory)
- Valuation bottom line
From a business valuation lens, Alberta’s Family Law Act is: provincial, support-focused, and income-driven. It often requires valuation professionals to look past tax returns and identify the true earning capacity of a business owner.
• Alberta provincial law governing support consequences of relationship breakdown
• Income-focused rather than property-equalization-focused
• Applies to married spouses and adult interdependent partners
• Valuation-intensive when income flows through a business
In short: in Alberta, the Family Law Act determines how business income is assessed for support, while the Family Property Act determines whether and how business value is divided.