Business Valuation for Partnership Disputes/Shareholder Disputes/Director Disputes “Fair Market Value” | PIN.ca

The Scale of Global Assets and the Missing Majority

To understand why some valuations routinely fail “fair market value, 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, valuators 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: They are financially descriptive, not forensically diagnostic.

• 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.
• 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.

This is not guesswork. It is evidence.

Apply the 25 Factors to Your Dispute: 877-355-8004

The Eric Jordan “25 Factors Affecting Business Valuation” is applied exclusively by Eric Jordan, CPPA. Call toll-free: 877-355-8004.

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 Business Valuation For Partnership Disputes

When a 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 all assets must be identified and valued. It presents a number but without an explanation to know if it is true.

That gap is precisely where courts require expert evidence.

The Failure of the "Big Three" Approaches

Traditional Market, Asset, and Income approaches were built for a world of brick and mortar. They fail in 2026 because they cannot measure the Forensic Reality of modern business.

1. Legacy Currency vs. Bitcoin (The Blockchain Inversion)
   • The Situation: In early 2013, Bitcoin was dismissed by the "Old Guard" as having zero intrinsic value.
   • The Failure: The Asset Approach showed $0 (no physical substance), the Income Approach showed $0 (no dividends), and the Market Approach had no "comparables."
   • The 25-Factor Validation: Eric Jordan acquired 78 Bitcoins at an average cost of $129 to forensically inspect the asset. Using the 25 Factors, he identified the intangible core was the unbroken Blockchain ledger. He predicted a scale to $50,000+ while others saw zero. This experiment validated the methodology's power to identify multi-trillion-dollar shifts long before they hit the mainstream.
2. Blockbuster vs. Netflix
   • The Situation: Blockbuster’s valuation was anchored in retail leases and physical DVD inventory.
   • The Failure: Traditional models valued the "bones" (stores) while ignoring the "Operating Spirit." They missed the shift toward digital convenience.
   • The PIN.ca Reality: A 5-Senses Inspection would have revealed that the "friction" of driving to a store was a massive intangible liability. Factor #4 (Proprietary Systems) identified that value had moved from the plastic case to the delivery algorithm.
3. Kodak vs. Digital Photography
   • The Situation: Kodak owned the "chemistry" of memories, anchored in massive manufacturing plants.
   • The Failure: The Market Approach compared Kodak to other dying film giants, creating a "circle of obsolescence."
   • The PIN.ca Reality: Using Factor #7 (Technical Obsolescence Risk), this methodology would have identified Kodak’s hard assets as "Stranded Assets." The value had shifted from chemicals to pixels and sensor software.
4. Encyclopedia Britannica vs. Wikipedia
   • The Situation: Britannica relied on printing presses and $1,400 leather-bound sets as symbols of value.
   • The Failure: The Asset Approach valued the weight of paper; the Income Approach projected door-to-door sales that the internet was already killing.
   • The PIN.ca Reality: Factor #19 (Customer Utility) would have shown the books had become "Information Statues." The real value was in the 68% Intangible Network of real-time data access.
5. Traditional Taxis vs. Uber / Lyft
   • The Situation: Taxis were valued based on physical vehicles and government-issued "Medallions."
   • The Failure: Traditional models could not see that a piece of tin (the medallion) has zero value once a superior system of delivery arrives.
   • The PIN.ca Reality: Factor #25 (Customer Experience/Trust) flagged the trust deficit in traditional cabs. Disruption moved value from the Iron (cars) to the Intelligence (the platform).
6. Travel Agents vs. Expedia / Airbnb
   • The Situation: Agencies relied on physical storefronts and proprietary paper brochures.
   • The Failure: Traditional models mistook a "Toll-Gate" (commissions) for a durable business, failing to see the move toward direct-to-consumer transparency.
   • The PIN.ca Reality: Factor #1 (Proprietary Data Rights) showed that once the consumer had the data on their smartphone, the agent’s intangible value vanished.
7. Borders Books vs. Amazon
   • The Situation: Borders focused on its prime real estate footprint and mahogany shelves.
   • The Failure: The Asset Approach viewed mall storefronts as assets, while the digital economy began viewing them as overhead liabilities.
   • The PIN.ca Reality: Factor #22 (Future Viability) weighted Amazon’s invisible logistics infrastructure at 68%, proving that data-driven delivery beats physical shelf space.
8. Fixed-Line Phones vs. Skype & WhatsApp
   • The Situation: Telecom giants relied on thousands of miles of copper wires and physical switching stations.
   • The Failure: In a major validation of intangible value, the Canada Pension Plan (CPP) bought a position in Skype for $300 Million in 2009 and sold it to Microsoft in 2011 for a profit of over $600 Million USD.
   • The PIN.ca Reality: Factor #12 (Customer Relationship Quality) identifies that value resides in the Connectivity, not the Cable.
9. Incandescent Bulbs vs. LEDs
   • The Situation: For 100 years, the lighting industry was a material replacement business.
   • The Failure: Traditional models could not account for a semiconductor product that lasts 25 times longer, which destroyed the old recurring revenue model.
   • The PIN.ca Reality: Factor #14 (Competitive Advantage Sustainability) flags that "cheap to make" is irrelevant when "cost to operate" is 80% lower.
10. Brick-and-Mortar Banks vs. Fintech (Stripe/PayPal)
    • The Situation: Traditional banking focused on marble lobbies and iron vaults.
    • The Failure: Traditional models valued the "Marble Building," failing to see that in 2026, customers view a branch as a place of Friction, not an asset.
    • The PIN.ca Reality: Factor #4 (Proprietary Systems) identifies that value has shifted to Transaction Velocity and Algorithmic Trust.
11. Traditional Automakers (ICE) vs. Tesla
    • The Situation: Titan manufacturers focused on mechanical engine parts and dealership networks.
    • The Failure: Traditional models valued the "Iron" (pistons) while missing the 68% Software-Defined Core (FSD algorithms and Over-the-Air updates).
    • The PIN.ca Reality: Factor #15 (Proprietary IP) weights Tesla’s billions of miles of real-world driving data as the primary value driver.

Exhibit A: The Anatomy of a Valuation Failure in Expropriation: 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.

Here is why the "Big Three" approaches failed this family, and how forensic factors identified the true value:

1. 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.

   • The Forensic Reality: Without the Location-Dependent Monopoly (Factor #19), $70,000 in inventory isn't an asset it’s a storage liability.
   • The 5-Senses Insight: My inspection revealed that the value wasn't in the "vape 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.
2. 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 (historical tax returns). Forensic valuation values the Planned Expansion. The "Operating Spirit" of the owner had already built the infrastructure for a new revenue stream that the city’s "Snapshot" valuation ignored entirely.
   • 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.
3. The Failure of the Market Approach (The "Compulsion" Fallacy")

   The city made it clear they would "outlast" the owner financially in court.

   • The Violation of FMV: Fair Market Value requires a buyer and seller acting without compulsion. The moment the city used "time" as a weapon, the Market Approach became 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:

1. 30 years of localized data (Factor #15)
2. A strategic leasehold stronghold (Factor #8)
3. 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:

1. From Rules of Thumb to Stress Testing: Like modern Engineering (FEA), my 25-Factor Stress Test identifies the "invisible" fractures in a company’s intangible core that traditional "multiples" ignore.
2. From Square Footage to Forensic Modeling: Accountants value a business on "Square Footage" (the Balance Sheet). I value it on the Forensic Cost to Rebuild the Revenue Stream, capturing the true 68% intangible gap.
3. From Eyewitnesses to DNA: An accountant’s opinion on a multiple is merely subjective testimony. My 5-Senses Inspection Report is the biological and operational DNA Proof of the business.
4. From Sampling to Total Oversight: Instead of "sampling" year-old financials, I utilize the Gut-Brain Axis a neurologically validated expert instinct (supported by 50+ scholarly papers) to perform 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 give pilots, surgeons and others with 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 on the pin.ca website.

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.

"We present the impartial facts to the court so that an expropriation client can be made whole exactly as the law intended."

Our disruption is not the first in history and change is often slow:

1. 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 (starting ~1870s–1910s), restricting entry, closing for-profit schools, and marginalizing "unscientific" practices (homeopathy, chiropractic, midwifery).
   • How it was disrupted: New methodologies (evidence-based medicine, randomized trials, public health data) + consumer/patient demand + regulatory shifts (e.g., Flexner Report 1910 initially strengthened AMA but later opened doors via antitrust challenges and rise of specialties/forensic pathology). Alternative fields (e.g., chiropractic licensed separately) and forensic experts (pathologists, toxicologists) gained ground in courts/litigation for more accurate diagnostics.
   • Parallel to your situation: Accountants' GAAP-based conservatism "hides" intangibles; forensic/experiential methods (like mine) force transparency and better "truth" in court, slowly gaining acceptance case-by-case as evidence proves superior outcomes.
2. Pharmaceuticals/Drug Pricing: Patent/Industry Monopoly vs. Generic + Value-Based Pricing (1980s–Present)
   • Dominant group: Big Pharma used patent monopolies + lobbying to control pricing/innovation, extending exclusivity via minor tweaks ("evergreening") and pay-for-delay deals.
   • How it was disrupted: New methodologies (generic entry post-Hatch-Waxman 1984, value-based pricing models, health economics/outcomes data) + regulatory pushback (e.g., Inflation Reduction Act 2022 allowing Medicare negotiation) eroded control. Generics now capture massive share; biosimilars challenge biologics.
   • Parallel: Traditional accounting valuation "monopolizes" with historical cost/tangibles; my forensic intangible focus (excess earnings, rebuild costs) mirrors value-based methods that expose overreach and win in disputes/negotiations.
3. Telecommunications: AT&T Natural Monopoly vs. Deregulation + New Tech (Pre-1980s Monopoly → Post-Breakup Disruption)
   • Dominant group: AT&T held a government-sanctioned monopoly (via patents + regulation) over phone service/equipment, controlling innovation/pricing.
   • How it was disrupted: Antitrust breakup (1984 divestiture) + new tech/methods (fiber optics, cellular, internet protocols) + competition from startups (MCI, Sprint) shifted to market-driven models. Incumbents lost dominance as better tech proved superior.
   • Parallel: Accountants' standardized methods hold sway in valuation; my methodology disrupts by proving better "make whole" results in expropriation cases, forcing gradual acceptance. It does take time.

Canadian Business Structures & Governing Legislation

1. The Canada Business Corporations Act (CBCA)

   The Canada Business Corporations Act (CBCA) (and its provincial counterparts such as the Ontario Business Corporations Act) applies exclusively to corporations.

   • Scope: Governs the creation, management, and dissolution of bodies corporate (entities with share capital).
   • Key Feature: Establishes the corporation as a separate legal person, distinct from its shareholders.
   • Exclusion: Does not apply to general partnerships, limited partnerships, or sole proprietorships.
2. Provincial Partnership Acts

   Partnerships are governed almost entirely by provincial legislation, not federal law. Each province has its own partnership statutes.

   • Ontario: Partnerships Act and Limited Partnerships Act
   • British Columbia: Partnership Act
   • Alberta: Partnership Act

   These acts define partner relationships, joint and several liability, and profit sharing. Unlike corporations, partnerships generally do not create a separate legal person, except for limited purposes such as taxation or litigation.

3. Other Company Structures

   Other business structures are governed by distinct legislative frameworks:

   • Sole Proprietorships: Governed by common law and provincial Business Names Acts (registration required if operating under a trade name).
   • Co-operatives: Governed by the Canada Cooperatives Act (federal) or provincial Co-operative Associations Acts.
   • Not-for-Profits: Governed by the Canada Not-for-profit Corporations Act (CNCA) or provincial equivalents.