Dodd & Dodd Attorneys, PLLC

Dodd & Dodd Attorneys, PLLC Louisville Kentucky

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How to Determine the Value of Business Goodwill in a Louisville Divorce

Determine the Value of Business Goodwill in a Louisville Divorce

What is “goodwill” and how does one determine the value of business goodwill in a Louisville divorce?  Does goodwill only apply to an individual or does it apply to a company as well?  A divorce which involves a closely-held business or professional practice is not only legally and financially complex, it will often be quite contentious.  If you or your former spouse own a business or professional practice or have an interest in a company you will need the experienced and proven advice and counsel of the divorce and family law attorneys at Dodd & Dodd.

The first question in how to determine the value of business goodwill in these cases often relates to whether or not all or part of the business or professional practice is going to be characterized as Marital property.  If any portion of the company is considered to be marital property the asset will require accurate valuation prior to the completion of marital property division.  The valuation of a company or professional practice is quite complex and there are many ways to appraise and accurately value a business in a Louisville divorce.

The valuation is based upon both “tangible” and “intangible” assets.  A business isn’t only just the products and/or services it sells and associated facilities, inventory and obligations.  The reputation and proven performance of a company or associated professional have a lot to do with the past, present and future success of the company.  This concept can also be applied to the location of the business.  These “intangible” elements must be considered

Some would explain goodwill  as “the expectation of continued patronage of the business by its customers.”  The Court of Appeals acknowledged the need to determine the value of business goodwill in a Louisville divorce “…by any legitimate method of evaluation that measures (the company’s) present value by taking into account some past result, so long as the evidence legitimately establishes value.”

The questions of how to determine the value of business goodwill as well as the tangible value of the company or professional practice require extensive legal skill, experience and knowledge.  If you and/or your spouse own a business or professional practice and are considering a divorce we invite you to review the strong recommendations of our former clients and contact us or call 502-584-1108 to schedule an appointment with one of our experienced divorce and family law attorneys.