BUSINESS VALUATION AND APPRAISALS CERTIFIED BY ERIC JORDAN, CPPA
Fees: $3,500 to $8,500 - Avg
Quote: In 4 hours.
Time: 7 to 14 day turnaround.
Income Tax Act Policy: 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.
Featured Testimonial March 14, 2022
"I worked closely with Eric to prepare a fair market valuation of my boutique consulting business in advance of a merger negotiation. Eric's assessment was astute, fair, and thoughtful. I believe his "25 factors" approach is comprehensive and MECE - mutually exclusive and collectively exhaustive. He spent a great deal of time deeply understanding my company's scenario, and had a genuine interest in learning about my business, and myself. I enjoyed our discussions, which went far beyond a transactional nature - Eric provided insight and perspective that was above and beyond my expectations. I would strongly encourage anyone considering Eric's services to engage him - he is well worth his fees and I believe I have made a connection for many years to come. Thank you Eric for your time and support."
Relevant Experience Is Key.
Almost everyone agrees that the intangibles are the drivers for businesses large and small. Correlating the Normalized Net Income to the huge intangible asset value that drives the business must be done.
We accomplished this by using relevant, long term business ownership and operation
experience to measure the factors, to find their importance to the overall business, and
assign an individual weight. This is why relevant experience is necessary to value
intangible assets. Furthermore, we believe it would be almost impossible for someone
to do this without relevant business owner experience.
In our experience of producing in the range of 20 business valuations for CRA purposes which to the best of our knowledge were all accepted and not challenged by CRA; additionally, in at least 200 other business valuations, we found that there were no circumstances where scores lower than minus 5 or higher than plus 10 existed. For efficiency, we therefore chose to use the scale of -5 to +10 in our determinations. We remind readers again of the court ruling on April 7, 2017, court file number 1601-15411 where the client won using my valuation and methodology.
We believe an advanced methodology like this has not been developed within the International
Valuation Standards Council and their business valuation organizational membership of 180 member
organizations across 137 countries; because their membership is almost 100% accountants
who lack long term entrepreneurial and relevant business owner operator experience needed for
valuing small businesses.
IVSC has 6 prominent Canadians on the board and the largest business valuation group
in Canada is a leading VPO member. These groups try to use
precedent or “stare decisis” status to block advanced methodologies to the detriment of clients, courts, the economy, and the industry.
What we have created is new to the small business valuation industry but not likely new to Venture Capitalists who have some methodology to understand intangible asset value.
