Eric Jordan's Business Valuation Experience in Canada | PIN.ca

Why Intangible Asset Valuation Requires Calibrated Human Judgment

Eric Jordan, CPPA - International Business Valuation Specialist

1. Valuation Is Not an Academic Exercise

Private business valuation is not an academic exercise. It is applied judgment under uncertainty.

Unlike academic or textbook problems, private businesses operate in environments dominated by human behavior, incomplete information, asymmetric risk, and intangible assets. In these environments, valuation accuracy depends less on mechanical correctness and more on the quality of judgment applied.

Judgment, in turn, depends on whether the practitioner has developed a calibrated gut-brain axis through long-term, consequence-bearing experience.

This page explains:

• why that calibration takes 10 to 15 years to develop,
• why credentials alone cannot substitute for it, and
• why long-term business owner-operator experience materially improves valuation accuracy.

2. Credentialed vs. Calibrated

Credentials certify knowledge. Calibration certifies judgment.

In high-stakes professions such as aviation and surgery, credentials alone are never considered sufficient. Pilots are trusted because their judgment has been calibrated through thousands of real flight hours. Surgeons are trusted because their nervous systems have been trained through years of operating on real patients under real pressure.

Private business valuation belongs in the same category.

Many evaluators and appraisers are properly credentialed. Far fewer are calibrated.

Calibration occurs only when:

• decisions carry real consequences,
• feedback is unavoidable, and
• errors are costly.

Long-term business ownership provides precisely these conditions.

3. The Repeated Empirical Finding: 10-15 Years

Across decades of peer-reviewed research in neuroscience, psychology, decision science, and expertise development, a consistent finding appears:

Reliable expert intuition emerges only after approximately 10-15 years of immersive, consequence-bearing experience.

Before this threshold:

• decision-making remains rule-based rather than situational,
• pattern recognition is incomplete,
• intuition is inconsistent, and
• risk is frequently misjudged.

After this threshold:

• judgment becomes rapid and embodied,
• complex patterns are recognized instantly,
• analytical reasoning integrates with physiological signals, and
• accuracy under uncertainty improves materially.

This is not opinion. It is a convergence of evidence across multiple scientific disciplines.

4. Why This Matters for Intangible Asset Valuation

Modern private businesses derive the majority of their value from intangible assets, including:

• management capability
• workforce cohesion
• customer loyalty
• systems and processes
• culture and resilience
• market position and competitive durability

These assets:

• do not appear cleanly in financial statements,
• do not behave linearly, and
• cannot be valued reliably through formulas alone.

They must be recognized, weighed, measured, and translated into dollar values through calibrated human judgment.

That calibration is what long-term owner-operator experience produces.

5. Scientific Foundations: Detailed Scholarly Evidence (1-20)

• Dreyfus & Dreyfus (1986) - Mind Over Machine
• Ericsson, Krampe & Tesch-Römer (1993)
• Ericsson (2006)
• Kahneman & Klein (2009)
• Burke & Miller (1999)
• Sonnentag & Kleine (2000)
• Agor (1986)
• Hammond (1996)
• Shanteau (1992)
• Melin-Johansson et al. (2017)
• Macnamara, Hambrick & Oswald (2014)
• Klein (1993)
• Dane & Pratt (2007)
• Hodgkinson et al. (2009)
• Hogarth (2001)
• Sadler-Smith & Shefy (2004)
• Boshuizen et al. (2020)
• Grant & Nilsson (2023)
• Orozco et al. (2022)
• Ericsson et al. (2019)

6. Additional Supporting Literature (21-50)

The following peer-reviewed works further reinforce the same conclusion: expert intuition and reliable judgment require prolonged, immersive experience, typically exceeding a decade.

• Krampe & Ericsson (1996) - Long-term memory structures in experts
• Helsen et al. (1998) - Anticipatory perception development
• Hodges & Starkes (1996) - Expertise in complex systems
• Charness et al. (2005) - Chess expertise and pattern recognition
• Campitelli & Gobet (2008) - Limits of talent without experience
• Sinclair & Ashkanasy (2008) - Managerial intuition
• Plessner & Czenna (2008) - Implicit learning and intuition
• Ericsson (2004) - Expert performance across domains
• Agor (1989) - Intuition in organizations
• Miller & Ireland (2005) - Strategic intuition
• Hogarth (2001) - Learning from experience
• Boshuizen et al. (2020) - Knowledge encapsulation
• Grant & Nilsson (2023) - Financial intuition
• Orozco et al. (2022) - Judgment accuracy
• Macnamara & Maitra (2019) - Practice and performance limits
• Ericsson (2008) - Intuition under stress
• Matzler et al. (2007) - Executive decision-making
• Akinci & Sadler-Smith (2019) - Behavioral foundations of intuition
• Gore et al. (2024) - Intuition under uncertainty
• Vincent (2021) - Business complexity
• Day & Lord (1988) - Leadership judgment development
• Blume et al. (2010) - Transfer of expertise
• Kanfer & Ackerman (1989) - Skill acquisition
• Allen et al. (2021) - Strategic judgment
• Jones et al. (2016) - Managing uncertainty
• Nye et al. (2022) - Experience-based decision-making
• Combs et al. (2007) - Human capital and performance
• Schmidt & Hunter (1993) - Predictive validity of experience
• Nagahi et al. (2021) - Decision frameworks
• Avolio et al. (2010) - Leadership intuition

7. Regulated Professions and the Experience Gap

Experience in highly regulated professions-such as law, accounting, medicine, chartered valuation, and engineering-does not substitute for owner-operator experience in competitive private markets.

Regulated environments often:

• limit personal economic consequence,
• constrain feedback loops, and
• reward compliance over outcome accuracy.

Private business valuation requires judgment developed where risk is personal, feedback is immediate, and mistakes are costly.

7A. Experience-Based Audit Capability in Private-Business Contexts

Long-term owner-operator experience does more than improve valuation accuracy. It also enables the independent evaluation of professional judgment, scope, and economic reasonableness across domains that materially affect private businesses.

This includes assessing whether:

• professional services align with their stated scope,
• fees are economically reasonable relative to complexity and outcome,
• decision-making authority has been implicitly exceeded, and
• conclusions affecting business value are supported by defensible reasoning.

This is not a regulatory audit. It is an experience-based economic and judgment audit.

Auditing Professional Fees for Reasonableness

Experience allows evaluation of whether billed effort is proportionate to task complexity, scope, and outcome using economic logic and pattern recognition rather than speculation.

Auditing Legal Services

Review focuses on economic alignment with client interests, proportionality of effort, and whether work materially advanced the client’s position.

Auditing Bank Decisions

Experience-based review examines whether lending decisions relied on defensible valuation logic and whether banks implicitly acted as valuators without transparency.

This capability flows naturally from the same calibrated judgment required to value intangible assets accurately.

8. Conclusion

Decades of empirical research converge on a clear conclusion:

Calibrated judgment is a biological and experiential achievement, not a credentialing outcome.

This is why my valuation work-grounded in long-term owner-operator experience and applied through the 25 Factors Affecting Business Valuation and the 5 Senses Inspection Report-is designed to be more accurate, reliable, and dependable when identifying and valuing the intangible assets that determine real business worth.