A.C. v. J.O., 2013 N.Y. Misc. LEXIS 3524 (Aug. 12, 2013)
The price of New York real estate was one factor a divorce court in Brooklyn recently considered in deciding how best to value the wife's dental practice. Two options were on the table: The husband's appraiser used the price-to-revenue method (aka, multiple-of-revenue method), relying on annual revenues and charts of sales of comparable businesses from national reports and concluding the business was worth $455,000. The wife's attorneys vehemently objected and offered a valuation based on the excess earnings method. It put the value at only $316,000. The latter was the better approach, said the court, because the excess earnings method properly considered factors unique to a professional office in New York and to the wife’s practice. She did not own the office, an office lease, or any of the equipment—in short there were no tangible assets. These elements would be part of the “ordinary sale of a dental practice in most of the United States,” the court recognized. But unlike elsewhere, given the exorbitant rents in New York, “it is not unusual for a professional to rent an office and the equipment necessary for a business."
The opinion tackles a number of additional valuation issues.