§2.07 Small Businesses or Professional Practices

In valuing a small business or professional practice, such as a law practice, you should consider expert testimony regarding the following [Marriage of Lopez (1974) 38 CA3d 93, 110, disapproved on other grounds in Marriage of Morrison (1978) 20 C3d 437, 453]:

• Fixed assets;
• Other assets, including properly aged accounts receivable, work in progress partially completed but not billed as a receivable, and work completed but not billed;
• Goodwill of the business as a going concern; and
• Liabilities.

In valuing goodwill, you may consider, among other factors, the following [Marriage of Fenton (1982) 134 CA3d 451, 460-461]:

• The situation of the business premises;
• The amount of patronage;
• The practitioner's personality, age, health, past demonstrated earning power, and professional reputation;
• The length of time the business has been established; and
• The customers' continuing patronage.

Goodwill is anchored to a “business” as opposed to a natural person because, as property, it must be transferable. [Marriage of McTiernan and Dubrow (2005) 133 CA4th 1090, 1096, 1099, 1101.]