Math and accounting systems can give an official position on the point that a company may no longer be liquid. The experienced entrepreneurial valuator will make a judgment call based on experience, if they think the subject company is at liquidity risk. There can be a negative score in some cases.
An experienced entrepreneurial valuator must look further and deeper than the basic face value figures that are presented. Given their personal experience they must weigh up the overall aspects of every resource that the company has. To ascertain if there is a liquidity situation or not.
An experienced entrepreneurial valuator can go above and beyond to identify new or missed opportunities within liquidation. Acquihire (where the workforce transfers to another company) can save a lot of termination costs.
Acquihire is relatively unknown outside of experienced entrepreneurial valuators and venture capitalists.
This is how an experienced entrepreneurial valuator meets and exceeds the requirements in the Canadian Income Tax Act Policy Paper.
“None of the top 150 valuators in the world are accountants.”
The top business valuators in the world are Venture Capitalists like Elon Musk, Peter Thiel, and our Canadian example Mark D Wiseman.
Of the 200,000 honest, hard working, professional accountants in Canada; less than 1% suggest they can do business valuations.
We believe this radical 1% of would be monopolists have no business doing business valuations in 2023 using outdated, unreliable, misleading and dishonest approaches to business valuation.
These outdated approaches are: Hard Asset, Income and Market approaches to business valuation.
Those 1% and their methodology was proven wrong in 2009 by Mark D Wiseman and the Canadian Pension Plan Fund.
Canadian Venture Capitalist Mark D Wiseman, working with the Canadian Pension Plan, valued a block of shares of a company that had financial statements showing huge losses (SKYPE), and purchased that block at $300 MILLION USD. Mark D Wiseman was also instrumental in selling that same block of shares for well over a BILLION USD two years later.
That day in 2009 was the day when accounting based valuators had their methodology turned on its head.
Mark D Wiseman has been added to a list of the top 150 Venture Capitalists in the world (Researched in March 2023) NONE OF WHOM are accountants.
The 150 top Venture Capitalists in the world who value some of the world's most valuable companies should be considered the world’s best valuation experts. And again, none of them, to the best of our research, are accountants. Does anyone seriously think these top experts would employ the old hard asset, income, or market approach to business valuation used by most accountant based valuators today? Ask Warren Buffet?
Venture Capitalists use honest accountants to supply reliable financial data that has generally been arranged for tax purposes. Clients have already paid these accountants tens of thousands of dollars to produce these documents that are generally needed to start a valuation.
This is also the basis of Eric Jordan’s “25 Factors Affecting Business Valuation” methodology. Honest Accountants produce the financial records required to start the valuation process. This is where, in private company valuations, experienced business owner/operators take over. These people with 15 years or more of relevant business owner/operator experience, are trained in the use of Eric Jordan’s “25 Factors Affecting Business Valuation”. They identify, measure, weigh, and put an estimated value on the intangible assets that make up the majority of most company value since at least 2009. This is when the Mark D Wiseman/Skype moment changed business valuation history.
Clients have paid their accountants tens and sometimes hundreds of thousands of dollars for accounting. We trust these professionals FOR ACCOUNTING AND TAX PURPOSES; but NOT for Business Valuation.
NONE of the top 150 valuators in the world are accountants.
Consider Warren Buffet and his partner Charlie Munger and what they have to say about accountants overeaching, and not staying in their proper lane. And not sticking to accounting.
Charlie Munger on accountants:
Warren Buffet on accountants:
The 99% of Accountants who stick to accounting are well respected. The other 1% give the rest a bad name.