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Math and accounting systems can give an official position on the point that a company may no longer be liquid. The experienced entrepreneurial valuator will make a judgment call based on experience, if they think the subject company is at liquidity risk. There can be a negative score in some cases.
An experienced entrepreneurial valuator must look further and deeper than the basic face value figures that are presented. Given their personal experience the valuator must weigh up the overall aspects of every resource that the company has. To ascertain if there is a liquidity situation or not.
An experienced entrepreneurial valuator can go above and beyond to identify new or missed opportunities within liquidation. An example might be Acquihire (where the workforce transfers to another company) can save a lot of termination costs and a company may be able to just go out of business instead of going bankrupt.
Acquihire is relatively unknown outside of experienced entrepreneurial valuators and venture capitalists.
I sure can Grace. Let us imagine a smaller airline that has a lot of pilots under long term contract. The airline has lost its flying charter for whatever reasons. With bankruptcy looming, a larger airline that needs pilots comes in and does an acquihire for the pilots and perhaps the management. The acquihiring company is able to offer a premium and everyone is better off. The receiver has less cost in shuttering the company and leaves more for the stakeholders.
Another example might be a call centre. The company might be insolvent but the management and staff would not be a burden on the receiver if an acquihire can absorb the workforce.
The takeaway might be that the experienced valuator might see more clearly the intangible value of the workforce.
This is how an experienced entrepreneurial valuator meets and exceeds the requirements in the Canadian Income Tax Act Policy Paper.
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