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Personal v. Enterprise Goodwill

Posted by Katherine Birnbaum - February 22, 2018 - Marital Assets

You have worked tirelessly to build your business over the years.  You have worked hard to retain your clients and keep them coming back year after year.  You have set your business apart from other businesses in your industry by building business relationships with your customers.  Now, your spouse is seeking divorce and wants half of your business.

When determining the value of the business, a business valuation expert will value the assets, liabilities, and possibly the “goodwill” of the business. What is goodwill?  The Florida Supreme Court defines goodwill as the intangible asset of a business that keeps your clients or customers coming back or the reputation of the business.

A key factor in determining how much of the business’ value your spouse is entitled to, is whether the goodwill is “personal” goodwill or “enterprise” goodwill.  Can the business go on and thrive without you or do the customers return just for you?  Would the sale of your business include a non-compete or non-solicitation agreement?  If it does, this may be an indication personal goodwill exists.  Because personal goodwill is not a marital asset, it will not be subject to equitable distribution during the divorce.  However, if the reputation of your business is independent of your presence, it is likely that enterprise goodwill exists.  Enterprise goodwill is a marital asset and is subject to equitable distribution.

When determining the value of the business, a business valuation expert will value the assets and liabilities of the business and whether the goodwill of the business is personal or enterprise goodwill.

At Birnbaum, Lippman & Gregoire, PLLC, we work with respected business valuation professionals in Palm Beach, Broward, Dade, and Collier Counties who will help determine the amount of your business you and your spouse are entitled to upon divorce.  Are you a business owner or spouse seeking or going through a divorce?  We provide personal, effective, and compassionate legal services at competitive rates.

This website is for informational purposes only and does not constitute legal advice.  It does not create an attorney-client relationship.  If you need legal representation, please consult an attorney in your community.

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Birnbaum, Lippman & Gregoire, PLLC is a seasoned Florida law firm focusing on Florida Family Law matters as well as state and federal Appeals. Our firm’s fundamental principle is the delivery of exemplary legal services and an uncompromising commitment to each client.

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