A weakening lending environment prompted Jeff Ellis to move his career another step forward.
The then banker and consultant watched as both loan volume and loan size shrunk substantially and rapidly.
Underwriter demand for professional and credentialed business appraisers ticked up. Ellis remembers one of his global clients trimming staff while trying to recruit Ellis as an appraiser, which is Ellis' longtime specialty and passion.
For Ellis, it was time to finally bring his plan of many years to fruition: to focus solely on identifying the true value of businesses.
"It became very evident that this was the way to go," Ellis said in a recent interview. "It came to me. I didn't come to it."
Ellis founded International Appraisal Services, funneling his 20 years of experience in valuation and appraisal as a senior lender into a La Jolla business designed to serve the local finance and small business community.
Ellis' clients consist of bankers, accountants and attorneys, who connect Ellis with owners needing to know the true value of their business and equipment.
For business owners like Richard Farace, who founded San Diego at-home tutoring service Doctrina Tutoring, Ellis played a crucial role in helping Farace secure bank financing.
"He was a great communicator and really spelled everything out for me," said Farace, who plans to ask for Ellis' help in valuing a nonprofit he works with. "There was no guesswork on my part."
Others need Ellis' appraisal services when they are planning for retirement, buying or selling their business, divvying up assets in a divorce, filing for bankruptcy, or placating the Internal Revenue Service, among other reasons.
Ellis analyzes the current market conditions, a business' history and its potential, which usually comprises the majority of its value, he said. He reviews financial statements, interviews management and employees, examines facilities and equipment, and factors in the industry and market risks.
He often works 12-hour days and weekends to accommodate his customers' schedules or to incorporate discretion into the valuation process.
"It's not uncommon for me to be under a truck at two o'clock in the morning, getting a VIN (vehicle identification number)," Ellis said.
In short, valuation and appraisal is tedious work -- and a lot of pavement pounding -- but Ellis is having the time of his life.
"I absolutely love what we do," he said, his face lighting up with a smile. "It's an ongoing, fluid situation ... we're constantly meeting new clients, and we provide a really important service to help stimulate the economy."
"If we can support a banker's requirement for lending, then there's money going out the door," Ellis added.
Ellis' enthusiasm for his work simply pours out of him. Those who know Ellis describe him as highly motivated, detail-oriented, committed and energetic.
"He has a drive to do work," said Louis Kaplan, Ellis' legal adviser, longtime friend and member of the business' advisory board. "He's not a guy who sits back."
Ellis' hardworking approach spills over into other areas of his life. An avid cross-trainer, Ellis tries to incorporate two workout sessions into his daily schedule, which starts at 4:30 a.m.
When asked about his favorite activities, he rattles off a list: kayaking, cycling, weightlifting, martial arts, swimming, hiking, kite-surfing, and the list goes on.
Ellis' first commitment, however, is to his client. He often meets his clients at their offices or facilities. He makes a point of not taking on too many projects at one time or spreading himself too thin.
"We have personal relationships," Ellis said. "We're very oriented toward value because that's what we do."
And with a continually growing clientele in nearby Mexico, Ellis is also aiming to offer all services in Spanish by the end of the year and is currently taking private courses. A Montreal native, Ellis is already fluent in French.
Ellis anticipates that the federal stimulus measures aimed at small businesses will provide another boost.
Part of the American Recovery and Reinvestment Act enables the U.S. Small Business Administration to guarantee up to 90 percent of bank loans, thus reducing the risk to the bank and theoretically making the institution more willing to lend.
More lending and underwriting activity means more demand for valuation and appraisal, although Ellis points out that his business is countercyclical: In good times, his services are needed to supplement financing and wealth management programs. In bad times, Ellis gets called in for bankruptcies and asset and business sales.
Regardless of the situation, Ellis advises business owners to avoid the temptation to take shortcuts, and instead to work closely with certified, specialized professionals, whether they are accountants, attorneys, bankers or appraisers.
"I've seen businesses that have become stronger because they've worked with their professionals, and businesses that have weakened because they have not," he said.
In Ellis' case, he holds the highest credential from the National Equipment & Business Builders Institute as a Certified Machinery Equipment Appraiser and is also a Certified Senior Business Analyst.
Ellis is also a graduate of the Toronto Dominion Bank commercial lending training program and the Toronto Dominion asset base lending/underwriting training program.
His background in lending, corporate finance and business (Ellis was the founder, chairman and CEO of a medical device firm in Toronto, Canada) has equipped him to better understand the needs of both the lender and the borrower, he said.
He is careful to note that his work is unbiased and his methods and documents are defensible.
"We're an advocate only for our own evaluation," said Ellis, who describes valuation and appraisal as both a science and an art. "We have no benefit to the outcome."
If Ellis is not an expert in an area, such as tax litigation or specific machinery, he reaches out to a vast network of specialized appraisers. They reach back as well, tapping Ellis for his specialty in finance.
Michael Irvin, director of Poway-based Exclusive Appraisal Source, recalls partnering Ellis with a client who was planning to liquidate all of his equipment and walk away from the business.
Ellis came in, performed a business evaluation, and showed the client that his business had value; he just needed a new business plan.
"There are times I've needed his expertise, and literally no one else could possibly do it the way he did it," Irvin said in a recent phone interview. "He's one of the most honorable business people I've ever dealt with."