We have additional damning information that was sent to us that shows the inadequate quality of the sale price data that is being sold to the business valuation industry worldwide. Even a video. Available to a court upon request.
Comparable Sales prices are legitimate factors when one is valuing tangible assets such as farm machinery, construction equipment, restaurant equipment, and residential housing in similar areas where there are many recent sales to use for price comparison. Unverified comparable sale prices for business valuations should never be used in an Income Tax Act compliant business valuation. The type of information a valuator would need to establish a true “comparable sale price” is usually very private information and I highly doubt families and private businesses would release it.
If you were comparing 6 oil and gas drilling companies each doing in the 10 Million dollar range a year in sales within the same geographic location and province or state with the same rules and regulation; then the comparisons between the public and private company could be similar and likely a good comparable. This is a far stretch from what the data sellers are offering.
If my client was facing one of the standard valuations produced by most of the current business valuators in Canada using unverified sale price data; this is the recommendation I would make to their lawyer.
- I would suggest that my client’s lawyer question any data used in an opposing valuation using “comparable sale price data” to see how all parts of that data was collected and verified in calculating market value.