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What is Goodwill in an Orlando, Florida Area Divorce Case?  

You are divorcing. You own a business. Is your spouse entitled to half the business? How do you determine the value of the business? You can hire an expert to value your business. That is usually a Certified Public Accountant who has qualifications to do business valuations. How will they value your business? Will they include Goodwill in the business valuation? How will the kind of Goodwill involved determine if it is a marital asset or a non-marital asset? 

What is Goodwill? 

Goodwill is the intangible asset arising as a result of name, reputation, customer loyalty, location, products, and similar factors not separately identified. 

Personal goodwill is the portion of goodwill that is created by an individual due to their skills, knowledge, training, and reputation. Personal Goodwill is a non-marital asset. 

Enterprise goodwill is created by the business’ non-personal relationship factors, including, but not limited to, location and name recognition. Enterprise Goodwill exists regardless of who the current personnel are in the business. Enterprise goodwill is a marital asset. Hard assets such as the furniture and building are a marital asset. 

 How the Type of Goodwill is Determined

In an Orlando, Florida area divorce case,  the business valuator will look at whether the Goodwill is Personal Goodwill or Enterprise Goodwill. How does the business valuator determine if the Goodwill is Non-Marital Goodwill? They will examine and determine whether Goodwill should be excluded from the Marital Estate in professional practices and some owner operated commercial businesses based upon the premise that if the sale of the business would require a noncompete agreement, it is “telling evidence” of lack of Enterprise Goodwill.  

The accountant will determine the value of the business using the income and market approaches. Most likely your spouse will have their own business valuator and you will have dueling business valuators in court at trial. They will both testify to the fair market value of the business in court. The business evaluator should examine the business’ liabilities when determining the fair market value of the business. The business valuator will testify whether the Goodwill is Marital or Non-Marital.  

If you have more questions regarding a Marital and Family Law matter, you may call Ann Marie Giordano Gilden at Ann Marie Giordano Gilden, P.A. at 407-732-7620 and set an initial consultation. You may also visit my website at https://www.annmariegildenlaw.com

This article is for informational purposes only and does not form an attorney client privilege.