Business and Professional Valuations

A multitude of business and professional practice interests are found in the Spokane region. This diverse array of businesses include restaurants, contractors, fabricators, retail automobile operations, and other entrepreneurial interests. Professional practices include ownership interests of doctors, dentists, veterinarians, lawyers, pharmacists, physical therapists, accountants and chiropractors.

Goodwill may exist for a professional person even though the goodwill is personal to the professional and is not readily marketable. In the Washington Supreme Court case of Marriage of Fleege, the court set forth the appropriate factors for the courts to consider when setting the value of professional goodwill in a divorce. The determination of the value of a professional practice can be reached by consideration of such factors as the practitioner’s age, health, past earning power, reputation in the community for judgment, skill, and knowledge, and his comparative professional success. However, professionals must have an ownership interest in their practice in order for there to be potential goodwill value. Employee (salaried) professionals have no goodwill value. It is critical to make a determination of ownership.

Because these factors are very general in nature, a wide discrepancy in valuation may be presented (often by hundreds of thousands of dollars) and the evaluating CPA is given the ability make a personal judgment in arriving at a determination of value. The success in setting an appropriate value depends in large part on the skill of the attorney representing either the practitioner or their spouse and upon the use of skilled expert witnesses.

David J. Crouse has extensive experience in business and professional practice valuations, expert preparation, and trial. He has also lectured extensively on these areas, appearing at recent Washington State Bar Association Continuing Legal Educations seminars. If your case involves a significant business interest, or a professional practice, you are invited to contact David J. Crouse about representation in your dissolution action.

Crouse Erickson