Situation
A couple in New Hampshire were getting a divorce and one of the parties owned a business in Massachusetts. Each party hired a business appraiser to develop a business valuation of the professional practice. Lou Pereira, Principal of Merrimack Business Appraisers was one of the business appraisers hired.
Merrimack Business Appraisers’ Approach
Lou Pereira prepared a thorough business valuation of the professional practice based on fair market value, the standard for business valuations in the state of New Hampshire. When developing a business valuation for a divorce, the venue is determined by the location of the divorce, not where the business operates. In this case, the standard of value is driven by New Hampshire divorce valuation requirements. Both appraisers came to a similar value for the business overall, but the other business appraisal professional included the personal goodwill of the working owner. Personal goodwill is generally not considered a marital asset in New Hampshire; therefore Pereira prepared a detailed analysis of the personal goodwill of the working owner and removed it from the opinion of business value.
Valuation Outcome
The business valuation determined by the other business appraiser was incorrect by including the personal goodwill of the working owner. Pereira’s business valuation was correct in excluding the personal goodwill enabling both parties to move forward in settling the divorce using his opinion of value.
When Values Matter.
