SHARIAH COMPLIANT BUSINESS VALUATION 2025
- How to value a halal business
- Islamic way to value a company
- Fair market value halal
- Islamic company sale valuation
- Shariah compliant business for sale
ERIC JORDAN CPPA – International Intangible Asset Specialist
$1,500 to $15,000 - Fee Range
Eric Jordan, CPPA
Toll free North America: 1 877 355 8004
Email: pindotca@gmail.com
Free ballpark estimate in our first conversation.
I’m Eric Jordan, CPPA, and the founder of the “25 Factors Affecting Business Valuation” methodology, a transformative approach forged from over 15 years of hands-on experience as a business owner-operator. My methodology redefines business valuation by prioritizing intangible assets—such as brand equity, customer loyalty, and intellectual capital—which often constitute 70% to 90% of a company’s true worth. I also recognize the English language as the world’s largest intangible asset, powering global communication, innovation, and economic connectivity.
My methodology is particularly critical for the Islamic world, where Shariah-compliant business valuations are essential. In Islamic finance, ethical principles, transparency, and adherence to Shariah law govern economic activities. My 25 Factors approach ensures accurate, fair, and Shariah-compliant valuations by emphasizing intangible assets like trust, community relationships, and goodwill, which are vital to Islamic businesses but often undervalued by traditional methods. This structured, tax-compliant process aligns with Islamic values, providing clarity for transactions, partnerships, or disputes. By leveraging the global influence of English for cross-border trade and communication, my methodology empowers Islamic businesses to thrive internationally while upholding Shariah principles. Contact me at 877-355-8004 or visit www.pin.ca to learn how my Shariah-compliant valuations can unlock your business’s full potential.
Financials are just the beginning.
In today’s market, intangible assets drive more than 90% of the average business’s value—yet most traditional methods overlook them entirely.
That’s where I come in. I follow a structured, transparent, and logic-based approach that complies with the principles of USPAP (Uniform Standards of Professional Appraisal Practice), recognized across the United States.
Understanding "Fair Market Value" in a business.
Fair Market Value is defined by the U.S. Internal Revenue Service and commonly accepted by courts, banks, and investors as:
"The price at which the business would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts."
-IRS Revenue Ruling 59-60 and USPAP Standards
My valuation methodology respects this standard but enhances it—by identifying, measuring, and valuing the intangible elements that most appraisers ignore.
The 4-Step Valuation Process
- Determine Normalized Net Income
—adjusting for fair market wages, fair rent, and reasonable owner compensation. - Use the Eric Jordan “25 Factors Affecting Business Valuation”
—to determine a logical and justifiable multiple. - Apply the multiple to Normalized Net Income
—to establish the core value. - Adjust for the current fair market value of tangible assets within the company.
(positive or negative), as identified on the balance sheet and verified through inspection or appraisal.
For Newer or Pre-Revenue Businesses
When Normalized Net Income isn’t available, we shift gears and apply a dollar-value estimate directly to the 25 Factors, creating a comprehensive value profile rooted in business logic—not outdated formulas.
We also offer the 5 Senses Inspection Report, which helps buyers and lenders gain on-the-ground insights into operational quality:
👀 Sight | 🔊 Sound | 👃 Smell | ✋ Touch | 👅 Taste (where applicable)
These are the changes that we apply in our methodology.
Accounting valuation formulas—focused on book value, tangible assets, and static financial statements—are fundamentally outdated. They were built for a 1975 industrial world, not today's economy where 90% of value is intangible. Eric Jordan CPPA’s methodology incorporates modern 2020s data, such as brand strength, workforce capability, and systems, through the "25 Factors Affecting Business Valuation" framework.
Shariah-Compliant Adaptation of the 25 Factors Affecting Business Valuation
Shariah Compliance Focus: The business must operate within halal (permitted) activities, explicitly avoiding prohibited sectors such as alcohol, gambling, pork, conventional banking, or pornography. The valuation report must articulate the business’s niyyah (intent) to align with Islamic principles.
Shariah Note: Document a clear statement of halal objectives in the valuation. Non-compliant activities require immediate restructuring or exclusion.
Shariah Compliance Focus: The business’s historical transactions must be free from riba (interest), gharar (excessive uncertainty), or dealings with haram industries. Past non-compliant activities (e.g., interest-based loans) must be disclosed and resolved through purification (e.g., donating haram income to charity).
Shariah Note: Transparency in resolving past non-compliance strengthens valuation credibility.
Shariah Compliance Focus: Financial statements must adhere to AAOIFI standards, replacing interest-based instruments with profit-and-loss-sharing (PLS) models like mudarabah or musharakah. Debt-to-equity ratios should align with Islamic thresholds (e.g., total debt <33% of market capitalization).
Shariah Note: Regular Shariah audits ensure ongoing compliance.
Shariah Compliance Focus: ROI calculations must exclude interest-based metrics. Use halal profit-sharing models (e.g., mudarabah returns) or asset-backed revenue projections. Forecasted returns should reflect real economic activity, avoiding speculative gains.
Shariah Note: Clearly define profit-sharing ratios in valuation models.
Shariah Compliance Focus: Liquid assets must not derive from interest-bearing instruments (e.g., conventional bonds). Per AAOIFI, cash and receivables should ideally be <33% of total assets to avoid over-reliance on non-productive liquidity.
Shariah Note: Liquidity assessments must incorporate Islamic audit parameters.
Shariah Compliance Focus: Liquidation costs must reflect only halal assets. Non-compliant inventory (e.g., alcohol stock) or contracts (e.g., interest-based receivables) are excluded or heavily discounted. Purification processes for non-compliant income must be documented.
Shariah Note: Valuation should detail how haram assets are isolated or disposed of.
Shariah Compliance Focus: Tangible assets (e.g., real estate, equipment, halal inventory) are prioritized in Islamic finance due to their intrinsic value. Assets tied to haram activities (e.g., casino equipment) are excluded from valuation.
Shariah Note: Tangible assets enhance Shariah-compliant valuation stability.
Shariah Compliance Focus: Growth strategies must utilize halal financing (e.g., sukuk, Islamic bonds) and ethical supply chains. Sustainability aligns with the Islamic concept of khalifa (stewardship), emphasizing environmental and social responsibility.
Shariah Note: Scalability plans should avoid haram markets or speculative ventures.
Shariah Compliance Focus: R&D must focus on halal products or services (e.g., halal pharmaceuticals, ethical tech). Funding for R&D should come from Shariah-compliant sources, avoiding interest-based grants or loans.
Shariah Note: Innovation (ijtihad) is encouraged within halal boundaries.
Shariah Compliance Focus: All business processes and contracts must reflect Shariah-compliant principles, using Islamic contracts (aqd) like musharakah or ijarah. Documentation should avoid riba or gharar clauses.
Shariah Note: Regular Shariah audits of systems ensure compliance.
Shariah Compliance Focus: Agreements must uphold Islamic principles of justice (‘adl), risk-sharing, and transparency. Include clauses for Shariah compliance reviews, income purification, and equitable exit terms.
Shariah Note: Avoid gharar (ambiguity) in ownership terms.
Shariah Compliance Focus: Management must demonstrate knowledge of Shariah-compliant practices. The workforce should adhere to Islamic ethics in financial reporting, customer dealings, and workplace conduct.
Shariah Note: Training in Islamic finance enhances valuation confidence.
Shariah Compliance Focus: The client portfolio should primarily consist of halal businesses. Clients in haram sectors (e.g., gambling) must be quantified, and their revenue share discounted in the valuation.
Shariah Note: High exposure to non-compliant clients increases valuation risk.
Shariah Compliance Focus: The supply chain must be free from haram products, unethical labour (e.g., forced labour), or non-compliant financing. Suppliers should be vetted for halal compliance and traceability.
Shariah Note: Shariah-compliant supply chains enhance valuation credibility.
Shariah Compliance Focus: Distribution channels, especially for sensitive sectors like food or pharmaceuticals, must adhere to halal standards, avoiding cross-contamination with haram products.
Shariah Note: Certification (e.g., halal logistics) strengthens valuation.
Shariah Compliance Focus: Marketing must align with Islamic ethics, avoiding deception, exaggeration, or immoral content. NFTs and cryptocurrencies must comply with halal crypto guidelines (e.g., asset-backed, non-speculative).
Shariah Note: Shariah-compliant branding enhances market trust.
Shariah Compliance Focus: Market leadership must be achieved ethically, avoiding monopolistic practices (ihtikar) or unfair competition. Ethical market dominance aligns with Islamic principles of fairness.
Shariah Note: Valuation should reflect sustainable, halal market strategies.
Shariah Compliance Focus: Use benchmarks from Shariah-compliant industry leaders (e.g., halal food giants, Islamic banks). Non-compliant comparables must be adjusted or excluded.
Shariah Note: AAOIFI-compliant metrics ensure accurate benchmarking.
Shariah Compliance Focus: Leases must follow ijarah principles, with fixed terms, clear responsibilities, and no interest-based penalties. Ownership of leased assets must be defined.
Shariah Note: Non-compliant lease terms reduce valuation reliability.
Shariah Compliance Focus: Sales contracts must use Shariah-approved structures like murabaha (cost-plus financing) or salam (forward sale). Avoid deferred interest or speculative penalties.
Shariah Note: Halal invoicing practices ensure compliance.
Shariah Compliance Focus: Minority shareholders’ rights must be protected per Islamic justice principles. Contracts should outline equitable profit-sharing and exit strategies without exploitation.
Shariah Note: Transparency in minority terms boosts valuation trust.
Shariah Compliance Focus: The purchaser’s business practices and funding sources must be halal. Conventional bank loans or haram business ties disqualify the buyer or require restructuring.
Shariah Note: Buyer vetting is critical for Shariah compliance.
Shariah Compliance Focus: Assess risks in Islamic jurisdictions (e.g., Saudi Arabia, UAE, Malaysia), where Shariah compliance standards vary. Political instability or regulatory shifts may impact valuation.
Shariah Note: Regional Shariah frameworks (e.g., Dubai’s halal standards) guide compliance.
Shariah Compliance Focus: Risks must be transparently disclosed, avoiding gharar. Use Islamic risk management frameworks (AAOIFI, IFSB) and takaful (Islamic insurance) for risk mitigation.
Shariah Note: Speculative risks (maysir) must be eliminated.
Shariah Compliance Focus: Growth opportunities must align with halal innovation, using Islamic finance vehicles like sukuk or mudarabah. Ethical expansion into halal markets enhances valuation.
Shariah Note: Opportunities should reflect Islamic economic goals.
This is a business valuation method designed for today’s world—compliant, credible, and buyer- partner ready.
If you’re preparing to sell, secure financing, or bring on partners, now is the time to get your business properly valued.
I’m Eric Jordan CPPA. Let’s reveal what your business is truly worth.
Toll free North America 1 877 355 8004
Email: pindotca@gmail.com
to learn how my Shariah-compliant valuations can unlock your business’s full potential.
Free ballpark estimate in our first conversation.