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Valuing a Professional Practice
Many professionals, such as physicians, attorneys, CPAs, realtors, etc., own and/or operate a professional practice. Establishing the value of such businesses requires an experienced business valuator, as these entities follow different standards of valuation from other types of entities.
If no real property is owned by the business, these entities typically have limited assets. In which case, the business value is based largely on "goodwill." This can mean any number of things, but typically means the value assigned to the business is based on its ability to generate future income, barring any significant changes in its future operation. Additionally, the business reputation in the community may affect its valuation.
In professional services businesses, goodwill will often depend largely on the owner s continued service to clients and the management of the business.
Dividing such professional practices, like all jointly-owned property, is subject to applicable laws and claims made by each party in a divorce. Make sure you have an experienced divorce attorney who can handle your situation, to ensure your maximum financial benefit whether you are a sole proprietor or are married to one.
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