Hello, everyone. I’m Eric Jordan, and today I want to talk about something that’s absolutely crucial when you’re thinking about the value of your business—how tangible and intangible assets are connected, not just in theory, but by Canadian law and proven valuation practice.
If you’re a business owner, lender, investor, or advisor, understanding this connection can make a huge difference in how you position your business for sale, financing, or growth.
Too often, businesses—and even some valuators—treat tangible assets like machinery, equipment, or buildings separately from intangible assets like goodwill, customer relationships, or brand reputation. But the courts in Canada have made it very clear that this separation simply doesn’t reflect reality.
The Supreme Court of Canada and the Tax Court of Canada have issued rulings that confirm intangible assets are capital assets, just like tangible ones. More importantly, these intangible assets amplify the value of the physical assets because they work together in the ongoing operations of the business.
Let’s look at some key legal cases that establish this principle.
First, in Gifford v. Canada, the Supreme Court ruled that intangible assets such as client lists and goodwill are capital expenditures when they provide “enduring benefits” by integrating with your business’s tangible operations. What this means is that if your customer base or your management team adds real, lasting value to your physical assets, that value must be recognized.
Then, in Canada v. GlaxoSmithKline Inc., the court went further to say that all economically relevant circumstances must be considered when valuing assets. This includes how intellectual property or supply chains—intangibles—interact with your physical assets to generate value. It’s not just about what you own physically, but how everything works together to create profits and growth.
Another important decision was Maréchaux v. The Queen. Here, the Tax Court rejected the idea of valuing tangible assets on their own. Instead, goodwill and other intangibles must be evaluated in the full context of your business—your workforce, leases, everything that supports your operations. Intangibles can literally double or more the value of your tangible assets.
More recently, in MEGlobal Canada ULC v. The King, the Tax Court emphasized synergies in valuations, especially when transfer pricing is involved. They recognized that tangible assets combined with operational intangibles—like supply chains and future profit projections—create greater value and make loans more secure.
Finally, there’s a lesser-known but critical ruling from early 2025. This Tax Court case confirmed that cash reserves and intangibles embedded in a synergistic business structure gain elevated value. In other words, your money, your client base, and your management all working together increase the true worth of your business beyond just replacement cost.
So, what does this mean for you as a business owner?
It means valuing your business requires a holistic approach—one that recognizes the powerful interaction between what you can touch and what you can’t, but that drives value just as much.
This is where my 25 Factors Affecting Business Valuation come in. These factors break down the complexity of your business’s value into clear, measurable parts. They cover everything from physical asset condition, customer loyalty, brand strength, management quality, contracts, operating history, risk factors—and many more.
Each factor recognizes that tangible and intangible assets don’t exist in isolation. For example:
The 25 Factors provide a practical blueprint to identify, measure, and weigh these elements so that your business valuation reflects true economic reality, just as the courts require.
Why is this so important?
First, it makes your valuation defensible. If your valuation is ever challenged—by tax authorities, lenders, or buyers—showing how you considered both tangible and intangible assets comprehensively will protect you.
Second, it helps you avoid undervaluing or overvaluing your business. Too often, businesses focus only on physical assets or lump everything vague into “goodwill.” Neither approach captures the full picture.
Third, it strengthens your position with lenders and investors. Knowing your business valuation accounts for all integrated assets reassures them about your business’s ongoing profitability and risk profile.
Canadian courts have made it clear: valuing a business requires you to look beyond the physical and understand the intangible drivers of value that operate hand-in-hand with your tangible assets. The Eric Jordan 25 Factors Affecting Business Valuation methodology is designed to help you do exactly that—combining legal insight with practical application.
If you’re considering selling, financing, or simply understanding your business’s worth, remember that value is more than what you see—it’s the whole system working together.
Thanks for listening. I’m Eric Jordan. Stay tuned for more insights to help you unlock the true value of your business.
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