Why the "Big Three" Models Fail in Modern Litigation

For decades, the valuation industry has relied on three pillars: the Asset, Market, and Income approaches. In the modern economy, these models have become "financial simulations" rather than reflections of reality.

The Asset Approach ignores the "spirit" of the business, valuing only its "bones."
The Market Approach relies on "comparables" that are rarely comparable in a world of unique intangibles.
The Income Approach is often a mathematical projection based on hope, not forensic evidence.

Current institutional research confirms that 68% of global wealth part of a $500 Trillion asset pool is now intangible. Traditional models are mathematically incapable of capturing this $340 Trillion inversion. To rely on them in 2026 is to provide a valuation that is fundamentally incomplete.

The Solution: The Eric Jordan "25 Factors" & 5-Senses Inspection

My methodology rejects abstract modeling in favor of Forensic Inspection, a standard of evidence that fits with common law going back centuries.

1. The 25 Factors Affecting Business Valuation

Developed specifically to quantify the "Invisible 68%", this system moves beyond "Goodwill" as a plug-in number. It defines, weights, and measures the 25 distinct drivers that actually determine a business’s survivability and value.

2. The 5-Senses Inspection Report

A valuation cannot be performed from behind a desk. My 5-Senses Inspection is a "boots on the ground" forensic deep-dive. It replaces "accounting estimates" with observed facts. This creates a level of unshakeable, first-hand evidence that is nearly impossible to challenge under cross-examination.

Proven, Stress-Tested, and Market-Validated

This is not a "theoretical" approach. It is a methodology proven by results in the most demanding environments in Canada:

2025 Ontario Tribunal: Subjected to rigorous cross-examination in a multi-million dollar litigation matter, the Eric Jordan methodology was accepted and remained unchallenged in final arguments.
The 10-Year Market Proof: In 2016, I valued a business at $3.2M using the 25-Factor methodology. It sold for that exact amount. In late 2025, that same buyer now the prospective seller returned to me for a 2026 exit valuation. There is no higher endorsement than a buyer who lives with a valuation for a decade and returns for the same expertise.
CRA Acceptance: Over 20 reports utilizing this framework have been accepted by the Canada Revenue Agency without pushback.

Informed by 43 Cases of Judicial Precedent

My methodology is informed by a curated analysis of 43 pivotal Canadian valuation cases. This research provides Forensic Proof of Intangible Dominance. It ensures that every report is compliant with:

The Duty of Impartiality: Acting as an assistant to the Court, not an advocate.
The Requirement for Detail: Moving away from "Intuitive Goodwill" toward granular, factor-based weighting.
The Asset Evolution: Aligning with the judiciary’s transition toward accepting Intangibles as the primary asset class.

Conclusion: The Expert Advantage

When a lawyer hires a "standard" valuator, they are getting a spreadsheet. When they hire me, they are getting a Forensic Reality. By accounting for the global intangible shift and using direct inspection, I provide a conclusion that is Comprehensive, Defensible, and Unshakeable.

DISRUPTION OF SELF SERVING INDUSTRY.

1. The World Bank Group

Primary Reference: The Changing Wealth of Nations 2024: Managing Assets for the Future

Key Findings

The World Bank’s Comprehensive Wealth framework demonstrates that in high-income OECD economies, intangible capital accounts for approximately 70%–80% of total economic wealth. This includes human capital, institutional knowledge, operational systems, trust networks, and organizational continuity.

2. McKinsey Global Institute (MGI)

Primary Reference: The Rise and Rise of the Global Balance Sheet

Key Findings

Since the 1990s, investment in intangible assets (software, IP, data, proprietary processes) has grown more than three times faster than investment in physical assets.

3. UBS / Credit Suisse Global Wealth Reports

Primary Reference: Global Wealth Report 2024–2025

Key Findings

Global asset value now exceeds USD $500 trillion, with increasing reliance on intangible networks of trust, customer loyalty, and experiential continuity to sustain market prices.

4. OECD

Primary Reference: OECD Compendium of Productivity Indicators (2025)

Key Findings

The OECD identifies Knowledge-Based Capital (KBC) as the primary driver of modern productivity and explicitly acknowledges that traditional financial statements “hardly detect” organizational and reputational assets.

Appendix: Glossary of Forensic Valuation Terms

(2026)

1. Knowledge-Based Capital (KBC)

Definition: Intangible assets that generate future economic benefit without physical embodiment.

2. Stranded Assets (Assets-at-Risk)

Definition: Assets that lose value when separated from the operating ecosystem that sustains them.

3. Operating Spirit (Going-Concern Core)

Definition: The functional DNA of a business the combination of systems, processes, and customer trust that produces earnings above industry norms.

4. Intangible Residual

Definition: The value remaining after deducting tangible assets.

5. Technical Obsolescence Risk (Factor #7)

Definition: Risk that a business’s core value driver is being replaced or is overly dependent on a single individual.

Superior FMV Determination in the Intangible-Dominant Era

The Eric Jordan "25 Factors Affecting Business Valuation"™ methodology, combined with the proprietary 5 Senses Inspection Reports™, represents a superior approach to determining fair market value (FMV) for private businesses in Canada and beyond particularly when applied by Eric Jordan himself or by practitioners he has trained who possess 10–15+ years of hands-on private business owner-operator experience with real "skin in the game."

This superiority stems from a fundamental recognition of modern economic reality: intangible assets (brand equity, customer relationships, operational systems, workforce capability, digital presence, trust networks, proprietary processes, location synergies, retention factors, and more) routinely drive 70–90% of a private business's true enterprise value in 2026. Traditional methodologies rooted in 1970s-era accounting and industrial-era assumptions systematically undervalue or ignore these drivers.

Why Traditional Approaches Fall Short in Today's Context

Intangibles Blind Spot: Balance sheets capture only a fraction of value; "goodwill" is often a vague residual lump rather than a measured, weighted component.
Projection Risks and Subjectivity: Normalized net income adjustments lack transparency and fail to isolate intangible contributions to earnings sustainability.
Market Data Limitations: Private transaction databases are sparse, non-transparent, and require aggressive assumptions/adjustments that can swing values by 50%+.
Lack of Real-World Proofing: They rarely incorporate on-the-ground verification, leading to opinions that crumble under cross-examination, CRA scrutiny, or actual market tests.

These flaws are not minor they represent a paradigm mismatch. In contrast, the 25 Factors framework explicitly identifies, measures, weighs, and integrates all value drivers (tangible and intangible) into a holistic, evidence-based FMV opinion aligned with the Income Tax Act definition: the highest price in an open, unrestricted market between knowledgeable, arm's-length parties under no compulsion.

Core Strengths of the 25 Factors + 5 Senses Approach

Comprehensive Coverage of Intangibles

The copyrighted 25 Factors Affecting Business Valuation (detailed in Eric Jordan's book and applied across thousands of hours of practice) systematically evaluates factors such as financial performance, distribution/client base, workforce skills/morale, brand strength, operational systems/efficiency, digital credibility, location advantages, retention risks, innovation capacity, and more.

Empirical Verification via 5 Senses Inspection Reports™

These proprietary on-site assessments use human sensory input (sight, sound, smell, touch, and overall "atmosphere") plus owner-operator judgment to verify operational reality, detect anomalies, assess integrity, and capture intangible cues (e.g., employee engagement, facility flow, customer interactions) that financial documents obscure.

Instinctive "Gut Brain Axis" from Proven Experience

True accuracy requires more than academic training it demands the honed intuition of pilots or surgeons: rapid pattern recognition, anomaly detection, and risk assessment developed through years of skin-in-the-game ownership and operation of private businesses. Eric Jordan's 15+ years (10,000+ hours) as an owner-operator, plus any trained practitioner with equivalent tenure, activates this "gut brain axis" to interpret data contextually. This experiential edge bridges theory and reality, spotting strengths/weaknesses that credentialed-but-desk-bound valuators miss.

Robust Scholarly and Legal Backing

The methodology is supported by 50+ scholarly studies (integrated into the framework for defensibility, as referenced across PIN.ca resources), which affirm the dominance of intangibles in modern value creation. It is explicitly tied to Canadian and international case law precedents and demonstrates full compliance with CRA's IC89-3 Policy Statement (41 points addressed).

Proven Real-World Performance

CRA acceptance of reports without challenge.
Court acceptance in Alberta and Ontario, with successful defense under cross-examination.
Market validation: a 2016 valuation of $3.2 million matched the exact arm's-length sale price, with the buyer returning years later for re-valuation.
Testimonials highlight resilience: “Under cross-examination, Eric Jordan’s valuation shone brightly and withstood scrutiny.”

In summary, when executed by Eric Jordan or a similarly seasoned, trained professional with deep owner-operator experience, the 25 Factors and 5 Senses Inspection Reports deliver superior FMV determinations because they prioritize empirical, holistic measurement of intangibles over rigid templates, leverage instinctive expertise forged in real risk and reward, and align with legal definitions, scholarly evidence, and proven outcomes in high-stakes environments. This is not estimation it's proof-driven valuation for the intangible-dominant era.

The Failure of Market, Asset, and Income Approaches in Private Company Valuation

Forensic Proof of the 68% Intangible Gap

In each of the following eleven examples, the "Old Guard" focused on the 32% Tangible Assets because their legacy tools were limited to physical measurement. The Disruptors focused on the 68% Intangible Core the true driver of enterprise value in private companies today.

Legacy Currency vs. Bitcoin (The Blockchain Inversion)
The Situation: In early 2013, Bitcoin was dismissed by the "Old Guard" as having zero intrinsic value.
The Failure: The Asset Approach showed $0, the Income Approach showed $0, and the Market Approach had no comparables.
The 25-Factor Validation: Eric Jordan acquired 78 Bitcoins at an average cost of $129 to forensically inspect the asset, identifying the intangible core as the unbroken Blockchain ledger and predicting a scale to $50,000+.
Blockbuster vs. Netflix
The Situation: Blockbuster anchored value in retail leases and DVD inventory.
The Failure: Valued bones, missed Operating Spirit and digital convenience shift.
The PIN.ca Reality: 5-Senses reveals friction; Factor #4 identifies value moved to delivery algorithm.
Kodak vs. Digital Photography
The Situation: Kodak anchored in manufacturing plants.
The Failure: Circle of obsolescence via comparables.
The PIN.ca Reality: Factor #7 flags stranded assets; value shifted to pixels and sensor software.
Encyclopedia Britannica vs. Wikipedia
The Situation: Printing presses and $1,400 sets.
The Failure: Valued paper weight; projected dying door-to-door sales.
The PIN.ca Reality: Factor #19 shows “Information Statues”; value is networked real-time access.
Traditional Taxis vs. Uber / Lyft
The Situation: Vehicles + medallions.
The Failure: Couldn’t see medallion becomes worthless with superior delivery system.
The PIN.ca Reality: Factor #25 flags trust deficit; value moved from iron to intelligence.
Travel Agents vs. Expedia / Airbnb
The Situation: Storefronts and paper brochures.
The Failure: Mistook commissions for durability; missed transparency shift.
The PIN.ca Reality: Factor #1 shows consumer data access erased agent’s intangible value.
Borders Books vs. Amazon
The Situation: Prime real estate footprint.
The Failure: Treated storefronts as assets; ignored overhead liability.
The PIN.ca Reality: Factor #22 weights invisible logistics at 68%; delivery beats shelf space.
Fixed-Line Phones vs. Skype & WhatsApp
The Situation: Copper wires and switching stations.
The Failure: Missed value in connectivity.
The PIN.ca Reality: Factor #12 identifies value resides in connectivity, not cable.
Incandescent Bulbs vs. LEDs
The Situation: Material replacement industry.
The Failure: Couldn’t account for 25x lifespan destroying recurring model.
The PIN.ca Reality: Factor #14 flags sustainability: cost to operate dominates.
Brick-and-Mortar Banks vs. Fintech (Stripe/PayPal)
The Situation: Marble lobbies and iron vaults.
The Failure: Valued friction as an asset.
The PIN.ca Reality: Factor #4 identifies value shifted to transaction velocity and algorithmic trust.
Traditional Automakers (ICE) vs. Tesla
The Situation: Engine parts and dealerships.
The Failure: Valued iron; missed software-defined core.
The PIN.ca Reality: Factor #15 weights proprietary IP and real-world data as primary driver.

The Death of Asset, Market, and Income Approaches: 4 Professional Paradigm Shifts

In every high-stakes field, there is a "moment of truth" where paper-based estimation is replaced by Forensic Reality. We have reached that moment in Business Valuation.

Engineering: From rules of thumb to stress testing (FEA). Using multiples is a dangerous rule of thumb; 25-Factor Stress Test finds fractures before courtroom collapse.
Insurance: From square footage to forensic modeling. Generalist “square footage” balance-sheet valuation misses the forensic cost to rebuild the revenue stream.
Criminal Justice: From eyewitness testimony to DNA. A multiple opinion is eyewitness-level evidence; 5-Senses is DNA-grade proof grounded in operational reality.
Manufacturing: From sampling to total oversight (Six Sigma). Accountants sample year-end statements; 25 Factors + experience provides total forensic oversight.

The Biological Defense: The Gut-Brain Axis

This paradigm shift is not just about data; it is about the Neuroscience of Expert Intuition. Over 50 scholarly papers support the Gut-Brain Axis the biological reality that veteran pilots and surgeons develop a "Second Brain." This neural pathway allows an expert to process thousands of data points instantly, resulting in a "gut instinct" that saves planes and lives. An accountant who has never owned a business or performed a 5-Senses Inspection lacks the biological hardware to "sense" value. My methodology merges this validated instinct with 25 forensic factors to provide a level of accuracy that the "Big Three" models are physically incapable of achieving.