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Business Leader of the Month: Joseph Calvanico of J2C Valuation 11-5-25
00:15:20
In this episode, Joseph James Calvanico, MAI, FRICS, President of J2C Valuation, discusses valuation trends, shifting market dynamics, and the balance between data and judgment in determining value. He also shares insights into the impact of AI,
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- [00:00]
A
This is Scott Becker with the Becker Business and the Becker Private Equity Podcast. I'm thrilled today to be joined by a brilliant valuation leader. We're joined today by the founder of J2C Valuation, Joseph Calvanico. And Joseph, just a pleasure to visit with. We'll talk about valuation trends in valuation, the deal market and a lot more. Joseph, can you take a moment and introduce yourself and tell us about J2C valuation?
- [00:28]
B
Absolutely. Thanks, Scott. I appreciate being on the podcast today. I was a partner at KPMG for many years and it was really one of the best educations, if you will, I've ever had in my life working for public accounting in a big four. Now it's big four. Of course, when I joined it was big eight. But the point is that KPMG was a great lesson in how to run a business, how to stay on top of all the issues and how to work with people, clients, all the people working with you and really with the whole enterprise. So it was a great way to start my career and to really give me the foundation for building J2C. Interestingly, I had followed one of my fellow partners, Steve Sherman, over to Loop Capital, which is a well known investment bank here in Chicago. It was started by really a local legend, Jim Reynolds. Both Jim and Steve were really part of my inspiration for starting J2C. It was actually during COVID that we were all still working hard career because we're a bank, we were part of the people that were the required or essential services, I should say. And so we'd be in there every day and talking. I said, you know, I feel like this is the best time for me to start my own firm. It was the right time and it felt like I was still doing quite a bit of work. And I got nothing but encouragement from both Steve and Jim. And So I launched J2C back in 2021, really kind of in the midst of COVID And it not only were they my inspiration, but my own son. I have a son that's just shy of 16 now, Joey Calvanico. And he is a sophomore at a high school here in Chicago. And just I wanted to leave a good legacy for him and also if he wanted to join me someday in business, I would love to be J2C and sons. And that was pretty much how we started.
- [02:24]
A
That's amazing. And thank you so much. Talk about what you do day to day. The core of the business day to day. Joe, what do you guys do and who you're working with?
- [02:35]
B
Sure. So we're a Full service valuation firm. What that means is we do business valuations, real estate valuations, and machinery, equipment, other items of personal property. So the best thing about what I do for a living is, is that it changes every day. It's a variety. It is amazing. One day I get a call from a REIT that owns hundreds of properties that need to be valued for an offering, financial offering, either a bond offering or something along those lines. Or I'll get a call from private equity. Hey, we're considering buying this group of properties and we really want to get your opinion with regard to what the value would be and sometimes just for individual components. And so basically every day that I answer the phone, it could be something different. We, we value, like I said, real estate. We do quite a bit of work here in Chicago with the attorneys that do property tax appeals. We do quite a bit of work there. We do quite a bit of work with some of the larger investment banks and we do work for a number of REITs. And then also we do valuation of. We do quite a bit of work with, actually not only with some of the big four, but some of the smaller accounting firms with purchase price allocation work. Purchase price allocation work is for financial reporting generally. So ASC805,850 that those, those brands, if you will, with respect to financial reporting.
- [04:01]
A
Matters, 100% and valuation often sits at the crossword of sort of numbers, strategy, judgment. How do you end up sort of balancing the data driven side of the valuation with the nuances of a particular company or particular property? How do you sort of work through so the data versus the finessing and trying to understand the actual business, the actual situation? How do you sort of manage those things?
- [04:26]
B
Scott, that's a really insightful question. I definitely appreciate it. It's a good one. Really. The interesting thing about it is, is that it's really all about the data, right? It's, it's either, you know, certainly the veracity of the data, but the data is, it's the core of what we have to work with. I mean, at the end of the day, data is what helps in any valuation, whether business, real estate, machinery, equipment. And it really is, it also kind of crosses along with the line of what's the premise of the valuation and purpose premise as well as what's the problem? Valuation problem itself. When we say valuation problem, some people say, well, that doesn't sound like a problem. And you've even had testified in court where judges say, well, there's no problem. Yeah, there is a problem. What it is it's a valuation problem we have to decide, not unlike a math problem. We have to understand what is really at the core of the valuation issues itself and how it's going to be used. Because there are different definitions of value and there are different premises of value that all cross reference or cross hatch, if you will, with the three valuation methodologies. The income approach, the sales comparison approach, otherwise known as the market approach in business valuation, and of course the cost approach or asset approach.
- [05:44]
A
Thank you. No, and absolutely. You get into this very complicated situation where if you're doing, for example, real estate valuation and somebody's trying to lower their taxes, there's this great mix of data driven and finding the right data. But you also have to be forthright and firm and honest in your valuation. And at the same time, the person wants evaluation that's going to help them to drive a lower valuation, at least for tax purposes. Since you've got this complication of hitting it very right. What are some of the trends you're seeing now in private company valuations, whether in certain sectors or certain areas? Obviously over the last couple years, multiple seem seemingly for private companies have gone down just a little bit, but not in all areas. What are you seeing out there? What are some of the trends you're watching, Scott?
- [06:32]
B
I mean, everything's in flux right now. That's, that's the bottom line. And, and you know, the thing is, you know, it's interesting and this will, this will resonate with you is I, I say that certainly one of the things that are, that are really driving things are podcasts. All right, Podcasts, you know, not unlike the, the, the, the parallel, you know, Facebook and LinkedIn and Instagram. Podcasts are really the new influencers. So it's interesting about what, what, what areas have grown and what areas have been, have taken on podcasts and where those podcasts have grown. So I see that also and this is no surprise to anybody. AI is absolutely at the forefront right now. It changes products. It actually changes to me that you see that there's a lot of innovation as a result of that and it's driving some efficiencies as well. So that's going to be something we're going to be watching certainly a little bit more as we value companies that have that at their core or companies that have AI products or visions, if you will. You know, trade relations are also driving things. I mean, there's a lot of uncertainties within the context of trade relations and geopolitical risks. So you, you know, some of Those companies that are dealing with those issues, we see that influencing value, certainly company and really the underlying real estate as the, as companies that do manufacturing and other things that end up entering into the trade environment, we see those things really kind of changing. Manufacturing really has kind of taken off again here in the United States. I've seen a lot more valuation of real estate and within the context of manufacturing properties, at one point in time they were a laggard, you know, in the industry you saw a lot of the types of warehouses that say Amazon and Walmart, all those companies that, that deal with big boxes, those were the warehouses, those were the drivers in industrial real estate. And to a certain degree they really still are. But interestingly enough, we're seeing some of the older manufacturing buildings still being sought after and even some of the new construction with regard to manufacturing, how they're melding some of the older styles of manufacturing buildings with some of the new warehouse type properties in terms of overall linear, you know, linear production flow and the like. So we see a lot of that, you know, inflation and interest rates are still going to drive just today, you know, I just saw that inflation's back, back to 3%, which I think is sustainable in the long run. But we'll see what the Fed says with respect to interest rates. That balance is going to be interesting. And I think that's also going to influence in terms of what kind of deals are going to be made. I saw a slight uptick in deal activity when the interest rates were lowered. Not a lot, but there were some, there were some, definitely some changes. And I think that there's going to be more of that as well. And then we'll see in terms of what the, what the tax savings, if that's going to balance out some of the trade issues and in terms of where companies are going to invest money and where and how that's going to drive the value of certain, certain industries and certainly real estate and certain machinery equipment as well.
- [09:39]
A
No 100%. And certainly the private equity world has been waiting for interest rates to go down a little bit to make money a little cheaper to finance deals. And the same thing with real estate. I mean, there's all this concern out there about commercial real estate and it seems to have bounced back some even though rates have still been traditionally high. You work with a lot of found investors boards. You know, what are some of the biggest misconceptions that people have about what might drive value in a business?
- [10:09]
B
Well, it's interesting and that's another insightful question. Is I think that time and place are singular. Okay? And what that means is, is that there's a time and place for everything. And where you are in that continuum drives quite a few things. And not everybody sees that is they think that a good idea and a good plan is all there is to it, but it's not. Not only do you have to have at the right time and place, but the other thing is it can't be a reactive type of situation. It's got to be proactive. Otherwise, here again, that misconception has cost actually a lot of big companies their lead or just an entire industry have gone by the wayside as a result of companies being more reactive rather than proactive. The other thing is that I see, again, a good plan and a good game plan is good, but is that going to be sustainable within that continuum with regard to time and place? So I think that that's a really important part that not everybody sees and when, when they do, is that they absolutely can capitalize on that.
- [11:11]
A
Thank you very, very much. And talk about Joe for a second. What are you most focused on and excited about as we head into 2026? Where are you most focused and excited as we move into this next year?
- [11:23]
B
Well, I feel like we're on the precipice of a good business environment, regardless of some of the things that we've even just discussed today, but some of the things that are out in the news, I feel like we're right on the precipice of some good change. I'm really excited at what's going to happen with respect to certain sectors of real estate and the companies that operate that real estate. I think the healthcare industry has obviously been a big driver of change certainly since COVID And I think it's gotten even more, I guess, really focused with respect to certain areas. I see a lot of, as you know, you know, all the baby boomers aren't, aren't, aren't quite completely aged out like myself. I'm at the end of the baby boomer generation and there's still a fair amount of assisted living, independent living. You see a lot of those areas really growing still more. And I think that the locations where these facilities are going to be are going to be dependent on not just good weather, but also, hey, where, where are the kids? Where are the kids living? You see lot of that going on as well. Interestingly enough, hospitals, not every hospital is successful. They have to be in certain areas. But there's also hospitals that are good teaching hospitals and research driven and that, that I think that area is going to be fun to watch and exciting to be a part of. I think as well as, you know, the cannabis industry was a, was a real high flyer for a while and it's kind of, as you know, probably has been more on the, more of the, the trough, if you will. But with the president talking about changing the status of the, of the, of the drug itself, you could see that, that that area is going to be a big change. And I think you're starting to see some movement in that industry as well. So that'll be interesting. And in terms of where they actually have licenses or you have to apply for a license in any given jurisdiction, if it's, if it's somewhat limited, you see value driven quite a bit from that. If, if you don't have to have any or if there's no limitation on a cannabis license in any given state, you're going to see that, you know, it's a dime a dozen. And so it'll be interesting to see how that, how that dynamic changes things coming up as well. I'm also, I'm also very excited about new technologies. I belong to an investment group called Koretsu, Koretsu Forum, Caretsu Forum Midwest in particular. And we're, we're like Shark Tank, but nicer anyways. Think Shark Tank but nicer anyways. And we preview about six or seven new companies every month. And what I've seen a lot of is in that certainly in the healthcare industry with medical devices, medical treatments, research into cancer cures. And just every once in a while you get a interesting idea for just some consumer product company or somebody comes to the fore with regard to certain opportunity zone investment opportunities. So there's, there's a lot of things that are going to be out there and I think that that's what I'm really excited about the most.
- [14:23]
A
Joe, what a pleasure to visit with you today and tell people where they could find out more about you, where they could, where they could meet you. I see you're on LinkedIn. Where can people learn more about, about yourself and your firm?
- [14:37]
B
Sure. Well, I am, I am definitely on LinkedIn. We have also have a page on LinkedIn. My website is the j2c valuation.com and it has all the information about myself and my team members and what we've done and what we aim to do with respect to the valuation process that we're, that we like to think that we're on top of and really the generator of. And here in Chicago, I'M you can always. You can always find me. I'm always around Chicago. So.
- [15:07]
A
Joe, what a pleasure to visit with you today on the Becker Private Equity and Becker Business podcast. Again, Joseph Calvanico. Just. Just brilliant. Thank you for taking the time with us.
- [15:17]
B
Thanks, Scott.