Waterford & Clarkston Professional Practice Valuations Lawyer
The property division in a divorce touches upon all aspects of the couple’s property, including the ownership of a professional practice. While it is unlikely that the practice itself will be jointly owned by both spouses (Michigan laws on the corporate practice of medicine and other professions prohibit a non-professional from owning a professional practice), some or all of the professional practice may be considered marital property subject to an equitable division between the spouses. Even if the existence of the practice predates the marriage, any increase in value to the practice during the marriage will be included in the marital state subject to division. It is therefore an essential part of the property division to value the practice at both the time of marriage and the time of divorce, and to consider the difference when dividing marital property.
The Waterford & Clarkston professional practice valuations lawyers at Clarkston Legal help clients with divorces involving all manner of professional practices, including:
- Medical or dental practices
- Legal practices
- Accounting practices
- Architecture or engineering firms
- Business consulting practices
Different Valuation Methods Yield Different Results
One critical aspect of valuing a professional practice is choosing or agreeing on the proper valuation method, since different methods of valuation can yield vastly different results. For instance, the liquidation value of a business looks at the value of the business assets that can be sold, and the fair market value of a business assesses what a willing buyer would pay for the company on the open market. But neither of these methods may be appropriate to a professional practice since neither considers intangibles such as goodwill. The value of a professional practice may be very closely tied to the professional him or herself and the value that person brings to the practice. Can the practice even be sold (and valued accordingly), or is it too closely tied to the professional him or herself? A proper valuation of a professional practice most likely will include an assessment of professional and personal goodwill and other intangibles, along with the tangible assets of the business.
Other important considerations in the valuation of a professional practice include:
- Cash flow projections – Established professionals don’t necessarily have to compete at the same level of a new professional to the market, and they may charge higher or lower rates depending on their reputation and skill, which can impact cash flow projection.
- Word of mouth and referrals – A professional’s established referral network will add value to the practice.
- Protected market – A hallmark of a profession is that its members are licensed and regulated and must pass through some sort of examination process to be admitted to practice. This means less competition for the professional, but it also means fewer people available to buy the practice, both of which affect the fair market value of the practice.
At Clarkston Legal, our Waterford & Clarkston divorce lawyers are tuned in to the unique needs of divorces involving professional practices or other high-value marital estates. We work with accounting professionals and other experts as needed to value professional practices fairly and ensure they are properly included in the property division to the extent applicable. Whether you are the owner of a professional practice or the divorcing spouse, count on Clarkston Legal for sound advice and representation in this critical aspect of the property settlement in your divorce.
Help with Professional Practice Valuation in Waterford & Clarkston Divorces
For help with professional practice valuations or other aspects of your Waterford & Clarkston divorce, call Clarkston Legal at 248-886-6600 to set up a free consultation with a skilled and knowledgeable Waterford & Clarkston divorce lawyer.