Malahat Valuation Group
Malahat Valuation Group is a professional practice, based in Greater Victoria, that focuses on business valuations, commercial real estate and equipment appraisals for clients across the country. We sat down with Ernest and Sandy Bednarz, the wonderful faces of Malahat Valuation Group, to learn more about their journey to become the only firm in Greater Victoria that offers business valuation and real estate appraisal under one roof.
What does Malahat Valuation Group provide, and what is the mission behind it?
Ernest: “Malahat Valuation Group is a multi-discipline business evaluation and real estate appraisal company.”
Ernest explains that what makes Malahat Valuation Group different from other companies that are doing similar work, is that they put complementary disciplines–that a business owner may need at the same time to value different assets–under one roof.
Ernest: “Whether you need a business valuation for some tax work you’re doing or there’s real estate involved, you would usually have to go to two different firms to get those assets valued and appraised. With us, you can do that under one engagement letter, one phone call. So it’s usually done a little quicker, a little more cost effective, and you get more of a personal approach from our team dynamic.”
What are your different roles?
Sandy: “I take care of the real estate appraisals. I focus strictly on commercial work, which is anything over four residential units. So anything from small multi-family buildings all the way to industrial complexes and high-rise office buildings. It’s a lot, but it’s really interesting.”
Ernest: “I’m a CBV, a Charted Business Valuator. I value companies. If the question is, ‘what is a company worth?’, we do the analysis, the study, and market research. I write reports that are supported and stand up to scrutiny by regulators, lenders, and investors. We value anything from a small mom-and-pop retail operations to companies that are making hundreds of millions of dollars in the IT space, and everything in between.
How did Malahat Valuation Group begin? Tell me a little bit about the history behind it.
Ernest: “We’ve owned a number of companies over the last two decades. I graduated with a bachelor’s degree from Royal Roads University in Entrepreneurial Management, so the education was focused on starting and growing companies from scratch. And we always enjoyed that kind of work. We’ve owned distribution companies, we’ve had companies in the marine industry, and even an innovative ice cream business. After we sold our last venture, we were looking for something new that used more of our intellectual knowledge and business experience, more so than selling products or other services that may be a little very capital intensive.”
Ernest explains that while they owned an ice cream distribution business, he was involved in a motor vehicle accident which took him away from the company. As a result, the business suffered and they had to make a claim with ICBC. Part of that process meant substantiating their business loss through a business valuation from a Chartered Business Valuator, after all these years in business they have never heard of such a profession.
Ernest: “It was sort of left in the back of my mind. And then many years later when we were looking at making a change and sold our last company, this experience percolated back to the top of my mind. And after doing some research, speaking with industry leaders sure enough it seemed like something that was right up my alley so I decided to pursue that designation through the Canadian Institute for Chartered Business Valuators. Sandy came up with the idea that we could do things together in a professional realm and after doing the market research we identified a complimentary service that was a natural fit for her, commercial real estate appraisal. So she pursued that designation.”
Sandy: “It’s the AACI. The Accredited Appraiser Canadian Institute”
Ernest: “Once we got designated and we formed Malahat Valuation Group, we applied that business experience to solving a problem and making a better widget. And the widget here is the alignment of multiple disciplines/services under one roof. Since we’ve gone to market we’ve grown 25-30% every year. So, I think things are going well and the market seems to be accepting our value proposition favourably.”
Ernest also explains that because of their business experience, their assignments are approached more from a practical perspective rather than just a theoretical one.
Ernest: “Our research is a little more thorough and our analysis is deeper.”
What year did you start Malahat Valuation Group?
Ernest: “We went out in 2016.”
Sandy: “It’s a baby still.”
Ernest: “We started working in our respective fields for or under other firms. So we were mentored and worked under people that were senior in the industry. Even though our company existed, we were working under someone else’s letterhead. That was until we were fully designated, which only happened in 2020; then we were able to really push and bring the Malahat name and our unique business model to the market in a more strategic and deliberate way.”
How does Malahat Valuation Group positively impact the community?
Ernest: “We’re a local, small, professional firm. We work, we play, and we spend our money locally. I sit on the board of Think Local First. The money that we make in our business is put back into the local economy. So rather than a national firm that’s sending money back to Toronto or elsewhere, we’re able to make an economic impact here locally. We provide a service locally and regionally versus someone taking money off the island or elsewhere in Canada.”
Sandy: “When we first started–in terms of being married and then also running a company together–we decided at the very beginning when we were finishing university that we wanted to stay in Victoria. I remember having a very deliberate conversation when we were planning out our future. We could have gone to Toronto with our degrees, we could’ve gone to Calgary where the incomes were higher, but we love the Island. This is what we envisioned our lives to be. So we worked really hard to stay here and for that reason we want to thrive here. And for us to thrive, Victoria has to thrive.”
Sandy also adds that Victoria has a great environment for new businesses, through organization such as Think Local First, local business owners have opportunities to connect with others, find mentors, do business with each other and build stronger more resilient enterprises.
Sandy: “Victoria is really a great place to be nurtured. I find that Victorians are very open to new businesses and new ideas, and also supporting local businesses. So it’s a great place to start and open a business because the culture is there.”
Do you have any favourite memories as business owners? What do you like about your roles?
Sandy: “I would say that my favourite memories–and this is the social aspect of it–are doing events. We have opportunities to go out and meet other professionals or potential clients in a more social setting and really get to know people personally and develop a foundation with them even if you don’t end up working with them. Victoria is so small that you realize you know everybody through one degree of separation. So that would be my favourite part is going out there and having a chance to talk to people and realize how much we have in common”
Ernest: “I’ll give you two. So one is from one of our businesses before, our ice cream distribution company. Part of that business model was also selling franchised locations to distribute a specific product. I recall Sandy pregnant, she was probably like 8 months along, on a ladder painting a ceiling in a shopping mall because we needed to open the store. So those are some of those extremes and sacrifices and pushes you do as every small business owner.”
Sandy: “Why is that your favourite memory? It’s one of my least favourite memories,” she laughs. “I guess it’s because we’re a team, so everything we’ve done we’ve always struggled or succeeded together.”
Ernest: “My second one, now in our current environment, is what I really enjoy about my work–meeting the individual business owners, learning about their story, how they started their business or how they grew their business, the challenges they faced along the way and what makes them tick. That discovery is what really drives me and engages me more so than the financial data of what the business is doing in terms of sales and profits. I mean, those are very important pieces to a valuation, but for me personally, I enjoy that face to face meeting.”
Sandy: “Yeah, with real estate appraisal, ultimately the way that process works is cash is king. So I could love your building, I could think you’re a great person, but it comes down to how much revenue is generated by a commercial property. But like Ernest said, having had business experience first hand, his perspective on business valuation is much different than somebody who has worked in accounting their whole life. They might look at it black and white financials, whereas Ernest, having had this knowledge, he is influenced by the company and the operations because he selects the appropriate discount rates or multiples based on what he sees, not just with what is on paper. So it kind of let’s him be a bit more influenced and allows him to take into account the qualitative factors driving the business; the magic sauce. Which is really cool, I wish I could do that more.”
Ernest: “That’s a good contrast. In business valuation, what we’re really trying to do, is quantify the risk of the business. The value is a measure of risk at a given earnings level. In the real estate aspect, it’s more comparable to what a similar property would sell for or has sold for. Real estate is very comparative in that way, versus there’s no two businesses that are worth the same, even in the same industry seemingly doing the same things; they likely will operate differently, earn a different level of profit, and have a different management structure. So there’s no apples to apples comparison in business valuation, it’s always apples to oranges of some sort. Yeah, very different ways of approaching the engagements and concluding values.”
What are the challenges you’ve faced as business owners?
Sandy: “One of the challenges I’d say we’ve faced is that most of our business clients don’t realize that we exist YET! No one is out there daily wondering how much their building is worth or how much they could get for their business. Unless they have some kind of triggering event or there’s a reason for them that requires a business valuation or a property appraisal and their accountant or lawyer tells them they need to get a valuation or appraisal, then we’re kind of under the radar.”
Ernest: “Most of our work comes from referrals from accountants, lawyers, or financial institutions. Many business owners, myself included before I became a business valuator, didn’t even know that this was a profession that existed.”
Elaborating on this point, Ernest says, “The key to our business is building awareness, and earning trust among those referring our services. Because even if a business owner learns about what we do and who we are personally, they may not have a need for our services for five or ten years. So the key for us to create that awareness and think of us as experts in the field so when a triggering event does take place, we are top of mind.”
Sandy: “People will have this business, this baby that they grew and love, but they don’t necessarily know what they’re going to do with it when they’re done. It’s always better when people who are in a position of moving onto retirement come to us five years out, maybe even as much as ten years out, because it provides an opportunity to really maximize what you leave, what your legacy will be, and how sellable your business is. And then make it something that can continue to grow beyond you and not just peter out.”
Ernest: “If you need to sell your business today, the value is what it is. You can’t change it. But if you have a runway of three to five years, there’s things you can do in your business to improve the value and make it more sellable and more attractive for someone to take over.”
Is there any special ingredient to keeping your business successful?
Ernest: “Reputation and integrity. We need to do high quality work, remain affordable, and deliver consistent results each and every time. Especially operating in a smaller market, reputation is paramount.”
Sandy: “Because in Victoria, everybody knows everybody. So it’s really important to have that reputation as a solid, professional, and reliable expert in your field. That’s key.”
Ernest: “We make sure we do complete work. We don’t cut corners. We make sure we go through rigorous analysis on every assignment, even if it costs more time, resulting in less profitability for the company. Every report has to stand on its own because every report could be scrutinized, all the way from Revenue Canada to the Supreme Court. So every piece that we put out there is basically a sample of our work. you could do 99 great reports and one bad one, and that one bad one is going to resonate with somebody somewhere.”
Sandy: “Yeah that’ll follow you forever so it’s really important to have a solid reputation and to be known as a reliable professional with good results.”
Ernest: “As you can imagine, we deal with clients that have conflicting goals. Some want a high value, some want a low value depending on the situation. We always have to follow the case fact and the value is the end result rather than trying to arrive at a predetermined destination. Because that’s why we exist, we’re that independent expert party that advocates our value conclusion and not for any special interest.”
Could you give me a sense of hiring and your current team?
Ernest: “We’re getting to a point where we could certainly use an additional body or two to support what we do.”
Sandy: “Even though we are more the faces of Malahat Valuation Group, we do have a larger team. We also have an equipment valuator and work with other senior professionals in both of our fields when anything comes along that’s more challenging. It’s not just the two of us.”
Ernest: “Our team at Malahat consists of five professionals at this point and we are growing that team sustainably. We’re looking for young professionals or students that are exploring their career options who would like to learn about these career paths and see if it’s something that they would be interested in.”
If someone had never heard of Malahat Valuation Group before, what is one thing you wish you could tell them?
Ernest: We specialize in both business valuations and real estate appraisals, we do this full time, we are experts in these fields. We answer the age old question, ‘what is it worth?’
Sandy: Yeah, we can definitely help. And it’s not as scary as it seems!
