Business Valuation $1,500 - $15,000 Appraisal Services Toronto for Divorce, Dispute, Sale, Purchase, CRA 85 Section 86 Tax Compliance.
Business Valuations Services in Toronto following Canada's governing legislation on business valuation.
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Do you want to value 100% of the assets on your company in Toronto?
Do you want to to be compliant with the Canada Income Tax Act?
The chart shows us that 90% of yout Toronto business value is now made up of intangible assets.
Most valuators today have no methodology to measure intangible assets and generally ignore them or vaguely refer to them as “goodwill” (circa 1975 ) with no explanation as to what goodwill might be.
Our proprietary “25 Factors Affecting Business Valuation” methodology identifies, measures, weighs, and values 100% of company assets as required to be compliant with the Canada Income Tax Act.
WHAT ABOUT FAIR MARKET VALUE IN VALUATIONS?
Eric Jordan (CPPA)
My qualifications are based on 8 points:
1. When one reviews the Income Tax Policy paper it suggests that my methodology and process
meet and exceed the requirements for considering “fair market value” and producing a business valuation
report that follows with the Income Tax Act Policy Paper.
2. I am accredited by, and a member in good standing of The Canadian
Personal Appraisal Group (CPPA). The CPPA has more than 700 members
from all Provinces. As a CPPA, I am experienced in the valuing of
tangible and intangible assets. CPPA’s have been accepted as experts
in courts across Canada. One can go to www.canlii.org and in the
Document Text search field enter “Canadian Personal Property
Appraisers Group”. A search here will find at least eight cases for
review. Being a member of any professional group such as doctor, lawyer, accountant, auctioneer, or
estate agent is not required under the Income Tax Act. Being experienced to produce a compliant
“fair market value” is important however.
3. Because the intangible assets are identified, documented, and measured, they can filed under Uniform Standards of Professional Appraisal Practice (USPAP) in the US and similar legislation in Canada.
4. My business valuation experience covers approximately 200 valuations incorporating tangible and
intangible assets during the period 2013 to 2022 across Canada, including Quebec. Clients are business owners
and lawyers spanning most industries including manufacturing, tech, agriculture, retail,
wholesale, online, transportation, hauling, trades, the service sector, and crypto and non-fungible tokens.
5. My methodology was accepted by Judge Macleod, Court of Queen’s Bench of Alberta document enclosed in a judgement handed down on 9 May, 2017.
(See the attached judgement record).
6. I can demonstrate more than 30 years of relevant business experience including determining the value of tangible and intangible assets in various ventures. It is my professional assertion that this experience is an important contributor to the creation and application of my valuation methodology.
7. By building on my relevant business experiences, I produced the proprietary “25 Factors
Affecting Business Valuation Model”. This evolved, along with my valuation experience, to be the robust
system as it now stands. My most recent addition for valuation consideration was blockchain assets and non-fungible tokens
which is a highly specialized area and evidence of the utility of my approach.
8.
See below a review of the 41 points in the Tax Act Policy Paper
that suggests Eric Jordan’s “25 Factors” methodology is more
than compliant with the Income tax Act, while others are likely to be found non compliant. Source
WHAT IS THE VALUATION PROCESS?
These are the implementation steps required by my proprietary and copyrighted system.
Step 1. Analyze the Balance Sheet: For example, it may be that a well-capitalized company has $600,000 retained as required capital in the balance sheet. In this hypothetical case, we would calculate a capital charge of perhaps 6%. or $36,000 against the income of the company. Subject to other factors.
Step 2. Normalize the Financial Statements: Meaning move all the assets to fair market value.
This ensures payments to self or related companies are at fair market value, and if not, then adjust. (Note the capital cost must be deducted)
Step 3. Value Normalized Net Income: This requires weighing and determining the multiple or number to be applied and why. This is where we apply the Position Papers and the “25 Factors Affecting Business Valuation” to produce the required valuation that is supported by unique facts related to the company as
required in Point 7 of the Tax Act Policy Paper. This is the “utility” of the 25 Factors system that makes it unique, transparent,
so accurate, and compliant friendly.
WHAT WEIGHT DO INTANGIBLE ASSETS HAVE?
Methodology
- For the last 15 years, Eric Jordan’s valuations have focused on the intangibles.
- His “25 Factors Affecting Business Valuation” model is way ahead of the curve here. This means that Eric’s clients have benefitted from the strong intangible asset valuation focus this 25-Factor approach provides.
- Each of Eric’s Valuation Reports not only details intangible asset value, but can also be supported by key Position Papers that dig deeper into the key factors impacting your valuation.
- These are standards gaining recognition worldwide.
By asking and answering the key intangible asset valuation questions well before other valuers start to address the issues, Eric believes that his foresight, level of professionalism, and client service in relation to determining intangible asset value for business valuation is unmatched in the industry.
25 Factors Affecting Business Valuation
| 1. Purpose |
| 2. History |
| 3. Financials |
| 4. Return on Investment (ROI) |
| 5. Liquidity |
| 6. Cost of Liquidation |
| 7. Hard Assets |
| 8. Utility, Sustainability, and Scalability |
| 9. Research & Development (R&D) |
| 10. Processes, Procedures, Systems, and Documentation |
| 11. Shareholder Agreement |
| 12. Management Capability, Workforce, and Intellectual Property |
| 13. Client Base |
| 14. Supply Chain |
| 15. Distribution Network |
| 16. Marketing (Advertising, PR, Brand & Crypto Promotion) |
| 17. Dominance in the market |
| 18. Industry benchmarks (averages) |
| 19. Terms of lease |
| 20. Terms of Sale |
| 21. Minority Interest |
| 22. Special Interest Purchaser |
| 23. Geopolitical considerations |
| 24. Risk |
| 25. Opportunity |
The object of the methodology is to determine the factors and sub factors within a business and weigh them as required in point 7 of the Income Tax Act Policy Paper.
Position Papers:
Utility, Sustainability, and Scalability
Cumulative Value of Marketing, Brand, and Advertising
Cumulative Value of Research and Development
Cumulative Value of the Workforce - Key Employees, Management, Regular Employees, and Contractors.
Value of the Client Base.
The Position Papers provide real world proof, with examples, that the factors are real, important, and purposefully dovetail with the 41 points in the Income Tax Act Policy Paper.
Valuation Experience - Eric Jordan
CPPA - Detailed Experience
My name is Eric Jordan. I am a CPPA which means Canadian Personal Property Appraiser. There are over 700 CPPA's across Canada. I specialize in Business Valuations. The Canadian Personal Property Appraisal Group provides members a proper legal structure with which to do valuations. They do not give instruction on anything other than how to use the forms and templates they provide to make a legal appraisal or valuation report. I am providing the following information on my experience because experience is the key ingredient in my credentials and my experience is extensive, relevant and when combined with my proprietary system I describe in the book "25 Factors Affecting Business Valuation" allows me to deliver what many believe to be the most accurate small Business Valuation available in Canada today.
Early Lessons
I was born in 1952 in Southwestern Manitoba. Like many other boys that were born on a farm / ranch I was a member of the local 4H beef club. The Canadian 4-H motto is "Learn To Do By Doing". It was at the age of 12 to 15 that I received my first training in valuing or judging. My 4-H group provided a lot of training in judging cattle. Like business valuation the process involved many factors. I enjoyed this and did well at the judging competitions.
I got started in the construction industry at 16 learning about steel stud framing, drywall, drywall taping, acoustical tile, and other types of ceilings. I took training as an apprentice and at 19 years-old I was a sub trade foreman at the construction of J H Bruns Collegiate in Winnipeg Manitoba.
Learning to Listen
I soon started my own business doing textured ceilings. I learned a lot of important lessons while running this business. The most important was learning to listen. I did specialized work. I would texture the ceilings in houses that were occupied as I had perfected a way to do this while protecting all the furniture and accessories in an effective and efficient manner. I would book work over the phone and set up a route that could take me from Manitoba to Alberta and back. One did not want to arrive at a house and find the work was impossible to do or that the owner was not likely to pay on completion. I was successful in that business. The key was to listen, listen, and listen. Asking the right questions and then listening carefully was critical to finding the correct information. Hearing the nuances became easy after a while. This is a very useful tool I use to this day while seeking information in the valuation process.
Introduction to Small Businesses
It was at about this time I got involved with the advertising business. I did advertising placemats across South Western Manitoba and Saskatchewan. If any of you are old enough and frequented Buddy's Steak Ranch on Albert Street in Regina, SK or Aunt Sarah's Restaurant in Brandon MB. you may remember my placemats with a character called "Prairie Tom" in the middle surrounded by squares of advertising.
I don't believe my creation died when I quit doing the placemats. A short time after that "Coffee News" publication started in Winnipeg, Manitoba and the character they use to this day looks amazingly similar to "Prairie Tom". I believe I at least partially inspired the creation of that very successful publication and I am very happy for that. The placemat advertising business put me into hundreds if not thousands of small businesses where I got to deal with the owners. Great experience for my future valuation career as my eyes were beginning to open as to what really happened in a small business. .
Auction Business - Learning to See
In about the same time period I had a mentor Charlie Salfries who was sure that I should be in the auction business. I ended up doing about six auction sales in 1980 and held an auction license in Brandon Manitoba. This was a real learning experience for understanding value and being able to see and feel how live events work. Nobody understands value better than auctioneers. When the Canadian Personal Property Appraisers Group started in 1995 most of the first members were auctioneers from across Canada.
One on One - With Hundreds of Small Business Owners.
The next business I got involved with was the movie business where I owned several rental stores and operated a movie broker business. In those days movies were a sideline to almost any kind of small business. I walked into thousands of small businesses and introduced myself. Hundreds ended up dealing with me. During this two to four hour process of dealing with the client on these video tapes, I really started to learn about what happened in a small business. Not all of the money went into the till. These business owners were happy to have someone to confide in. They would tell me amazing ways they saved on paying tax and all sorts of quirks about their particular business and industry. My experience extended to the US, as I purchased movies from small businesses then leased and sold these movies back into Canada. From this experience I could now understand what really happens on the ground in a small business as compared to what shows in the financials. This was invaluable one on one experiences with hundreds of different business owners across all sorts of industries. One can never learn these things in academia and I have a real edge on those who don't have this type of experience, most especially those situations where bookkeeping is suspect or non existent.
Pin.ca - Helping Business Owners Advertise for Buyers
Some video clients would tell me that they were selling so I should not leave movies with them as their business would be sold and gone by the time I was back in three months. My experience at that time suggested otherwise and I would ask them to just call me if they sold and leave the movies with a neighbouring business in the town. Two years later the business would often close down "unsold" and there would be an empty building for sale.
This is where I got the idea to set up an Internet showroom or catalogue of businesses for sale on the Internet. I was correct and the Pin.ca website has been successful helping business owners to find buyers for the past twenty years.
Valuation
Working with hundreds of small businesses, advertising to the market place, I got to understand about valuation. I had a client who was a Chartered Accountant who helped me to understand from the accounting industry viewpoint, how they look at valuing a business. I knew however that that was not the whole story. At about the same time I had a client who was a Resume Broker. He had a formula for getting inside his clients head and finding out what intellectual property they retained in their brain. He would write that into a resume and these people would easily find a job. I knew that same thing would work with a small business. A friend of mine Reid Nunn had spent a long time in the insurance industry and he taught me a lot about risk. Between those three things I was able to start to put the pieces together for doing an accurate business valuation and that was the beginning of the 25 Factors Affecting Business Valuation.
CPPA Certification (National Accreditation)
This brings us to 2015. I had a formula and a lot of experience but I lacked the legal structure to present a business valuation to a court. That is when I reached out to the Canadian Personal Property Appraisers Group in London, Ontario. I got certified through them and became a CPPA. Now I had a proper legal structure for doing my business valuations. Canadian Personal Property Appraisers Group teaches you the legal structure you must use to produce a valid Valuation. The CPPA certificate for me now is really a moot point as my experience and the legal structure I use stand on their own.
Income Valuation
For those people who need Income Valuations done, I offer my experience dealing with thousands of small business owners across Canada. Hundreds of these were close business relationships forged over time. This combined with my credentials should put me at the top of any list for an INCOME VALUATION.
Bitcoin and Intangible Assets
By 2013 I had my valuation process fairly well in place and had spent thousands of hours researching intangible assets which I felt were the most valuable part of a small business. I was doing business valuations and I decided to test my process on the toughest intangible asset in the world "Bitcoin"
I purchased 78 Bitcoins and proceeded to test.
My process led me to believe the key element in Bitcoin was the "blockchain" and for the reason of the blockchain, I deemed that Bitcoin would have value in the future. I predicted $500 Bitcoin, $1,000 Bitcoin and the real possibility of much higher. I think everyone can agree my analysis was correct and Blockchain has proven valuable.
Crypto and Blockchain Applications Including Promotion
Crypto and blockchain applications are emerging as disruptive factors in some business sectors and companies. Understanding where blockchain applications could be employed within a business is uncommon in 2021 and largely unknown outside of Venture Capitalist circles.
Herein lies the advantage.
As with websites and online selling twenty years ago, early blockchain adopters in business will gain dominance over the less agile companies. Does anyone in Canada remember Sears?
If Crypto matters in your company and your valuation (past, present, or future), a valuator that understands crypto and blockchain is vital.
Experience is the key factor. I have done hundreds of business valuations and my valuations have been accepted by CRA and Court of Queen's Bench. Numerous divorce proceedings across Canada have been concluded using my valuations, and filed with the courts. (including Quebec)
