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Meet Catherine, a Partner in our Valuations and Litigation Support team. Her work has taken her across the world and back, and now she’s dedicated to helping clients like you with their valuations needs.
1. What led you to valuations?
My path is a winding one and it’s a great example of what makes this such an exciting industry to work in.
When I was choosing a university program, I knew I liked math and I was choosing between actuarial science and commerce. Ultimately, I decided to go to McGill for commerce and become a Chartered Professional Accountant. I had a cousin who was a Chartered Accountant at the time and she was working for a major bank. She was doing very well and had a great career, so I followed her example.
While working through my degree, I knew I wanted to work in professional services — that was something I could picture myself doing as a career. I wasn't sure if I was going to work in auditing for my whole career, but I thought maybe I’d end up doing some consulting. That's what led me into business valuations.
I started working in London after I asked for a secondment at my previous firm. My husband had an opportunity to work abroad through his firm, and we were choosing between London and New York. We opted for London because we thought Europe would be a totally different and new experience for us. I worked with a transaction support services team while living there.
When I returned to Canada, I went back to the audit and assurance group for a year and decided to transfer into the financial advisory services group, and that's where I started working towards my Chartered Business Valuator designation.
From there, I started working in sell-side transaction support, focusing on mergers and acquisitions, and business valuations. I did a little bit of both in parallel. That's the early part of my career and how I decided to go into valuations.
2. When does someone need a valuation?
There's a variety of reasons you'd need a valuation. A typical example we see is an entrepreneur who has built up a business over a number of years, and they're about to retire. The entrepreneur wants to sell and has received offers but is unsure if the prices offered are reasonable or fair. With a valuation in hand, an entrepreneur can negotiate for a fair price and get the most out of what they've built.
Another situation is tax planning ahead of a sale. When a business goes to sell, the shareholders may need to restructure their shareholding in advance of a sale in order to maximize after-tax proceeds. To do that properly, they need a valuation.
We also provide litigation support services. Let's say a business is owned by two people and they start having disagreements. One of the owners wants to buy the other out and they can’t agree on the price. In small, private companies, business owners don't have the in-house expertise to develop a proper valuation. That's where we can help. Disagreements can escalate all the way to court, too. I have testified as an expert witness on valuation issues, detailing what businesses are worth and how we reached those conclusions.
Audit support is another area where valuations are required. Depending on the structure of some organizations, you'll need a valuator to determine what certain shares or assets are worth as part of the audit process. Some of these hard-to-value items include intangible assets and financial instruments.
3. How did COVID impact your work and your clients?
The spring brought us new challenges. The market was experiencing a lot of volatility and this impacts our clients that use financial instruments. Some of the valuation techniques used in valuation draw on public markets. The public markets saw drastic changes in March and April and companies had to make estimates for their quarterly financial reporting. Because of the increased volatility, management had to apply judgment and needed expert advice to assist them.
We also saw a backlog in cases when the court system shut down temporarily, which is challenging and can create stress for clients that want issues to be resolved. But now courts have reopened and implemented technology to enable some hearings to happen remotely and this is helping the courts get caught up.
4. What are the foundations of a good valuation?
You need to have a good understanding of the business and its key performance indicators or value drivers. One technique we like to use is a SWOT analysis — strengths, weaknesses, opportunities, and threats. By looking at these four areas, you can step back and detail the outlook for your organization.
Creating financial models is another valuation foundation. Prior to COVID-19, companies would create a financial model for their base-case scenario. But now, companies are creating models for different possible scenarios such as downside, base, and upside based on different types of economics recoveries (V-shape, U-shape, swoosh, etc.). Financial modelling is more challenging in these uncertain times but if you have solid models, you are closer to developing good valuations.
If you have questions about valuations and your business, contact Catherine Tremblay, CPA, CA, CBV, ASA, CFF, Partner, Valuations and Litigation Support, at 514.228.7772 or
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