Three new medical cases show why matrimonial valuations are so difficult

If you're ever having the feeling that you should stop doing evaluations for family law clients, don't read this post; it confirms the worst you've thought.  It even includes a case where the doctor thought his opinion was more valuable than the appraisers.

In Garcia v. Garcia (Fla. App., Jan. 20, 2010), the husband’s expert argued for a strict application of the buy-sell agreement, which would have limited his share in a successful hematology practice to a mere $45,000—compared to the wife’s expert, who used a net asset value to appraise it at $900,000. At the very least, the husband argued, the restrictive buy-sell should considerably discount the NAV (but he lost both arguments on appeal).

Or consider Amaraneni v. Amaraneni, (La. App., Feb. 12, 2010), in which the doctor claimed his interest in an urgent care clinic had no value apart from goodwill attributable to his professional qualities. But he failed to provide any financial documentation to the court-appointed expert; at deposition, he was similarly “vague” and un-responsive. His name was on the wall but the clinic wasn’t named after him. A manager supervised all the operations and staff—and the expert apportioned all goodwill to the enterprise, also confirmed on appeal.

Finally, in Dickert v.Dickert, (S.C., Jan. 11, 2010), the trial court valued the husband’s successful dental practice at $360,000, including over $255,000 of “enterprise goodwill.” In an expedited appeal to the S.C. Supreme Court, the husband argued that state law precluded any consideration of goodwill in a professional practice, due to its speculative nature. The wife claimed the current majority rule on enterprise values was the better law, but the court disagreed, finding the goodwill asset “too intangible” to support an accurate valuation.  (All three case digests will appear in the April 2010 Business Valuation Update™.)

What weight should appraisers give a restrictive buy-sell when valuing medical practices? How do you handle a doctor who won’t provide adequate disclosures or who boasts that all value is personal? And how do you go about convincing a court that any goodwill value is accurate and credible? For the answer to these and more questions—including the impact of current healthcare reform, coding and regulatory updates, and the constant question of reasonable compensation—turn to BVR’s just-released Guide to Physician Practice Valuations, by Mark Dietrich and other leading experts in the field.