New update and free download on valuing goodwill

BVWireIssue #110-4
November 30, 2011

Thanks to a subscriber inquiry, we’ve just updated our ever-popular free download Goodwill Hunting in Divorce to reflect the current state of the law in Tennessee regarding the determination of the goodwill value of a professional practice. According to this one-of-a-kind, state-specific summary, at least 28 jurisdictions now clearly follow the current majority rule, which holds that enterprise goodwill is marital property but professional goodwill is not.

Yet, the recent McReath case out of Wisconsin just as clearly stated that the majority rule was “wrong” because it’s based on the premise that professional goodwill is not transferable. In that case, both parties agreed—and the court found—that a non-competition agreement effectively converted a significant portion of the goodwill value into “saleable” professional goodwill. An Oregon court has already cited (but declined to follow) McReath, and the case has come up in several BV professional venues, most recently at the AICPA conference in Las Vegas and also the latest BVR webinar on the state of the “double dip” in divorce (featuring Stacy Collins from Financial Research Associates and Don DeGrazia from Gold Gocial Gernstein). Given the “must read” nature of McReath, we’ve created a new free download from both the Court of Appeals’ and the state Supreme Court’s decisions; check out this and all our free resources here.

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