Valuation and Appraisal is Our Full Time Business.
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- Appraisals to Support Litigation
- Qualified Expert Witness
BUSINESS VALUATION AND APPRAISALS
CERTIFIED BY ERIC JORDAN, CPPA.
How to Value a Business
Generally $1,000 to $5,000
Call for exact pricing for your situation.
|FACTORS AFFECTING VALUE
This is the key Point: If someone is presenting or proposing a valuation without taking these factors into consideration, the valuation number is likely to be misleading and almost certainly not accurate for a small business.
- Return on Investment
- How has R&D been accounted for?
- Shareholder Agreement (if one exists)
- Value of Employees
(cost of recruitment and training as a group)
- Client Base and cost to rebuild
- Value of Supply Chain
- Value of Distribution Network if one exists
- Internet Presence and Use (social network)
- Dominance if any in the marketplace
- Knowledge Base of Owner and Employees
- Processes and Procedures Documentation
(How well are all aspects of the company documented?)
- Industry Averages
- Lease Terms
- Leasehold Improvements
- Currency Fluctuations and Geopolitical Considerations
- Leverage - Cost of money.
Is leverage applicable and if so at what risk?
- Minority Interest (if applicable)
- Special Interest Purchaser
(Partners are also special interest purchasers as they have more knowledge, interest, and opportunity, with less risk than regular buyers.)
- How well is the business/practice expected to function with changes in management? (if applicable)
|Return on Investment is Always My First and Last Consideration
How Financials Can Be Deceiving:
(This is the kind of practical solution offered by our system.)
Accounting for tax purposes is totally different than interpreting financial statements for Business Valuation Purposes. Let us give you just one example: (Think Partnership or Divorce)
For tax purposes R&D is an expense in the year the R&D occurred. For the purpose of an accurate valuation the R&D should be amortized over a period of 5 to 12 years. HUGE DIFFERENCE.
The financials must be normalized to reflect proper treatment of R&D. If we didn’t do this a company could spend 95% (or all) of the profit on R&D and might successfully claim the company to be worth very little for a short period of time. Perhaps not fraud but certainly manipulation, depending upon the purpose. (Divorce or other partnership)
Eric Jordan, President
Call or email now!
Profiles of some 2016 clients:
Most are in Edmonton, Calgary, Vancouver or Toronto
- Multi Million Dollar Distribution Business- Valuation for purpose of sale.
- Plumbing and Gas Business- Valuation for purpose of divorce proceedings.
- Multi Million Dollar Eco Tour Business- Valuation for purpose of expansion loan.
- Law Practice- Valuation for purpose of sale.
- Lawn and Yard Maintenance business- Valuation for purpose of divorce proceedings.
- Art Studio Franchise- Valuation for accounting purposes and CRA requirements.
- Plumbing Business- Valuation for purpose of divorce proceedings.
- Irrigation and Snow Removal Business- Valuation for purpose of divorce proceedings.
- Large Retail Bakery- Valuation for purpose of sale to employee over 5 years.
- Software Distribution rights in Canada- For Australian Parent Company (Agency Dispute.)
- Janitorial Supply Business- Valuation for purpose of partnership dispute.
- Tree Pruning and Lawn Business- Valuation for purpose of sale.
- Battery Distribution Business- Valuation for purpose of sale.
- Software Testing and Quality Assurance Company- Valuation for purpose of partnership dispute.
- Blind Manufacturing and Installation Company- Valuation for purpose of legal action in partnership dispute. This went to court on May 27, 2016 and resulted in our client receiving over 80% of the amount he sued for.
Client is available as a reference.
- Classic Car Renovation Business- Valuation for multi-million dollar lawsuit in Florida launched by Canadian partners.
- Dance Studio- Valuation for purpose of establishing value for pending sale.
- Cross fit GYM- Valuation for purpose of establishing a viable price for buyer to offer.
- Jim’s Burger Location in US- Valuation for purpose of divorce proceeding.
- Two Wholesale Bakeries- purpose of the valuation was to find values so the companies could merge.
- Sign Manufacturing Business- Valuation for purpose of a minority shareholder leaving company.
- Landscaping and Excavating Company- Valuation for purpose of divorce.
- Day Care Facility- Valuation to support litigation and negotiation for damages inflicted by City in zoning error.
- Accommodation Business- Valuation for purpose of sale.
- Smoker Operation (8 pigs at a time in size)- Valuation for tax purposes.
- Flooring Business- Valuation for purpose of sale.
- Retail Wine Business (Franchise concept)- Valuation for purpose of sale.
- Prop Business- Valuation for purpose of partnership buyout.
- Computer Retail- Valuation for purpose of potential purchase.
- Music Composer Business (original soundtracks for documentary movies and videos)- Valuation for purpose of divorce proceedings.
- Two Pharmacy Locations- Valuation for purpose of sale consideration.
- Luxury Bed and Breakfast combined with Events Business- Valuation for the purpose of sale.
- Pool Building Company- Valuation for purpose of sale to family.
- Automotive Related Business- Valuation for purpose of sale.
- Specialized Manufacturing Firm within Printing Industry- Valuation necessary as someone expressed interest in purchase.
- Daycare- Valuation for purpose of possible sale. (Interested Purchaser came forward)
- Focused Builder- Valuation for purpose of establishing value for employee buy in.
- Software Maintenance Contractors- Valuation for purpose of possible merger. (many millions of dollars)
- Chiropractic Practice - Valuation for purpose of buy in.
- Wholesale Food Business- Valuation for purpose of settling partnership dispute.
- Accounting Firm- Valuation for purpose of divorce.
- Call Centre- Valuation for internal purposes.
- Hair Salon- Valuation for purpose of employee buy in.
- Convenience Store and Gas- Valuation for purpose of lease dispute.
- Specialized Builder of Restaurants- Valuation for purpose of employee buy in.
- Wholesale Food Manufacturing and Distribution- Valuation for purpose of partnership buyout.
- Retail Sporting Goods Franchise- Valuation for purpose of purchase.
- Diesel Repair Shop- Valuation for purpose of partnership dispute.
- Cellular Repair Company- Valuation for purpose of internal planning.
- Roofing Company- Valuation for purpose of partnership consideration.
- Upscale Personal Services Company- Valuation for purpose of internal planning.
- Specialized Wheel Business- Valuation for purpose of sale.
Eric Jordan (CPPA) www.pin.ca
209 - 1027 Pandora Ave. Victoria, BC - 1 800 606 0310
Victoria - Vancouver - Edmonton - Calgary - Saskatoon - Regina - Winnipeg - Ottawa - Toronto
Fees range from $1,000 to $5,000 - Average $3,500
|Business Valuator Services Available Across Canada 1-800-606-0310
JUDGES - LAWYERS - PARTNERS IN DIVORCE PROCEEDINGS
Bring the judge a valuation based on experience and logic.
PARTNERS IN BUSINESS DISPUTES - BUSINESS BUYERS BUSINESS SELLERS - CANADA REVENUE AGENCY
WHAT KIND OF BUSINESS VALUATION DO YOU NEED?
• FAIR MARKET VALUE - ONGOING OPERATION
• FAIR MARKET VALUE - ASSETS IN PLACE BUT NOT OPERATING
• ORDERLY LIQUIDATION
• ORDERLY LIQUIDATION VALUE OVER TWO TO FOUR MONTHS
• INSURANCE VALUATION
Are you insured for replacement costs of rebuilding a business after a loss including Intangible Assets? Have your insurer acknowledge and accept valuation prior to buying insurance.
• Value of recruitment and training of a group of employees to the position of cohesively working together as they were prior to the point of interruption, damage or loss.
• Value of rebuilding client base to where it was prior to the point of interruption, damage or loss.
• Value of reimplementation of systems and procedures in place prior to the point of interruption, damage or loss.
Banks are losing a lot of business these days to lenders who understand intangible assets. Define the value of your intangible assets. If your bank is not considering the value of your clearly defined intangibles you need to find an new lender who is better educated in your business model.
Our Valuations are generally half price or less than others. This is possible because we are more focused on Small Business Valuations and not working for Corporations.
The niche we serve is Small Business Valuations with special expertise in understanding intangible assets that are often missed as they don't show up on the Balance Sheet. In addition to Financial Statements I take into account; processes, procedures, value of supply chain, value of distribution network, knowledge base of owner and employees, value of employees (cost of recruitment and training as a group,) value of client base, Internet presence and use, documentation and risk.
The rate of return on the real Normalized Net Income is always the first and last consideration.
Value to who? The bank, the seller, the buyer; our valuations can include more than one.
|How to value a business; the valuation or appraisal is a process. Once we have all of the information we need, via the intake conference, your valuation report will be delivered to you in approximately one week. We refer to our evaluation as a Value Statement.
|WE COME AT THIS FROM FOUR DISTINCT VIEWPOINTS:
The view from an accounting perspective; relying on the the numbers created by the clients' existing accountant, then finding the real "normalized net income" through a proprietary process.
Looking from the insurance viewpoint and assessing risk to buyer.
From the point of view of a resume broker; assessing the value of the
human capital involved in the business.
INTELLECTUAL PROPERTY AND PROPRIETARY PROCESSES:
Understanding, assessing and estimating the intellectual property and proprietary knowledge that is transferred with the business. Change of ownership and management does matter.
This is a 2 to 3 hour conference call that can include as many stakeholders as required.
As no two businesses are the same, the questions will vary.
Below is a list of some of the areas that we will cover.
(1) Why: What is the purpose of the valuation?
(2) Who: Value with whom owning and managing the restaurant?
- Your current value with current ownership and management?
- Value with a new restaurant owner with less experience?
- Value with buyer like you with similar restaurant management experience?
- Value with an upscale buyer who has the financial ability to build on what you have accomplished in your restaurant business?
- These WHO questions make a huge difference to the final appraisal.
(3) Normalized Net Income: I must understand what questions to ask to be able to determine the real 'Normalized Net Income.' This figure is seldom what you see in your year-end accounting, which is generally calculated to determine the lowest amount of tax legally payable.
- Owners and families are often overpaid or underpaid depending upon individual tax situations.
- What would the owner have to pay someone to fill his/her position in the restaurant?
- There are about twenty more normalizing questions that must be answered and these can be different depending upon the answers given to previous questions. This is where experience counts.
(4) Leasehold Improvements: These need to be covered regardless of whether the building is leased or owned.
It is important that the right questions are asked in any comprehensive appraisal.
(5) Hard Assets: Determining fair market value.
Book value means nothing if we want to know the true value of the business.
(6) Intellectual Property: Copyright, Proprietary Processes, Business Operation Manuals. These are your operating manuals; the step by step instructions on how to run your business and how to train others to operate your business. This greatly affects value; positively if it you have them and negatively if you don’t have them, and much more negative if it would not be possible for you to have a practical manual that would allow for your business to continue if you were unable to function.
(7) Value of Cash Flow: This is calculated by finding the normalized net income then multiplying it by a ratio determined by risk, opportunity, and the intellectual property affecting the means to produce the cash flow.
(8) Soft Assets: Do you have intellectual property that has fair market cash value outside of your business?
(9) Risk: What are the possible risks to your business?
No appraisal can be completed without properly understanding risk.
- Having an operations manual in place, or not having an operations manual, can mean a difference of between 5% and 25% - If you don't have one... get one.
- How long is the business lease?
- Are there reasonable options to extend the lease?
- If the owner of the building also owns the business has the rent been paid at market rates?
- Are you in a one industry area, or is the area changing?
- Are industry trends your friend or enemy?
- Are there any Government regulations?
- Competition and pricing challenges?
- Changes to accessibility? Road changes?
- How good is the succession plan, and do you even have one?
- Operations and Training Manuals - How complete?
- Additional questions depending upon the answers given.
Depending upon the complexity of your business, you can expect to receive your report within one week.
As you can well understand, no computer program, gross sales or other rule of thumb guessing techniques are going to be helpful for you in determining the real value of your restaurant. In fact, these techniques could harm you. Valuation and appraisal is our full time business. We do a lot of restaurant valuations and other business valuations..
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|TSX - Fair Value Report. When a small publicly traded TSX listed company needed a report on fair value to meet TSX requirements they turned to Eric Jordan at Pin Services Ltd. You can <a style="color: #45581d;" href="http://pin.ca/value375/Opinion%20of%20Fairness%20Jordan%20Jan%2028.pdf" target="