Divorce is rarely easy, and property division is one of the most complex aspects of most divorces. Property division becomes even more complicated if you are a business owner.
Your business is considered a marital asset, and since you are most likely the one keeping your business, having an accurate and complete valuation is important.
What is goodwill?
One key piece of your business valuation is goodwill. A general definition of goodwill is the value your business has in your community and how likely it is that you will continue to retain customers.
Goodwill is not a tangible asset, like a house or other physical item of property. A goodwill valuation requires a detailed, thoughtful analysis. Due to the specialized nature of performing a goodwill valuation, it is typically performed by an expert.
Commercial goodwill vs. personal goodwill
There are two types of goodwill. One is commercial goodwill, which is sometimes called enterprise goodwill. This type of goodwill is distinguished by its ability to transfer itself if the business is sold.
For instance, your brand name, logo and products could remain the same if you sell your business. This is an example of commercial goodwill.
The other type of goodwill is personal or individual goodwill. This type of goodwill is something that cannot be sold or transferred because it relies on the good professional reputation of the business owner.
If your customers come to your business because they want to work with you personally, this part of the valuation is personal goodwill.
There are several goodwill valuation methods
Complicating things even further, the law does not state an exact formula for how goodwill is measured. However, there are various methods that experts use that are legally acceptable.
As the business owner, the lower value your business has, the better outcome you are likely to receive in the overall property division. You can also try to argue that your personal goodwill is not a marital asset and subject to property division, since it is an individual asset that belongs solely to you.
It can be extremely beneficial to have a divorce attorney experienced in high-asset divorce. An attorney can help you decide which goodwill valuation method is most beneficial, allowing you to maintain your financial stability and business success both during and after your divorce.