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Valuation of a Professional Practice During a Carlsbad Divorce

On Behalf of | Mar 14, 2020 | Professional Practice & Business Ownership

The valuation of a professional practice during a Carlsbad divorce is one of the most expensive and contentious issues one may face in a divorce. Professional practices including medical and dental practices, lawyers, engineers, accountants, architects or other licensed professionals present significant challenges for both parties in a divorce.

How do you value a professional’s interest in an ongoing practice so that community property interests in the practice may be fairly divided? This is why it is so important to contact Burke & Domercq if you own a professional practice or are the spouse of a professional contemplating a divorce in North County or Carlsbad.

The professional with an ownership in practice or a practice of their own will quickly realize that the methods used to establish valuation of a professional practice under California law do not necessarily reflect what may would consider to be the “fair market value” of the practice. The valuation will not be based upon some fictitious number established in the operating agreement or shareholders agreement of the practice.

It is right to be concerned about “double dipping” or the attempt by some to use the same “earnings” established in the valuation as a basis for calculating child support or spousal support.

The experienced Certified Family Law Specialists at Burke & Domercq are not only in professional practice themselves, they have represented professionals including many attorneys and their spouses in divorce cases before North County family law courts for decades. It is important to work with highly skilled and experienced lawyers if you are considering a divorce which involves a professional practice.

California case law has clearly established the methodology used to accurately establish the value of a professional practice during a North County or Carlsbad divorce. The Court will usually base the value of the practice upon many factors including but not limited to the actual physical or fixed assets of the business, accounts receivable, earnings from work in progress as well as business which is completed but has not yet been billed.

“Goodwill” is a complex factor which must also be considered as part of the valuation process. Goodwill is basically the value which the individual professional represents to the unique capacity and ongoing ability to conduct the business as well as their relationship with customers, vendors and other professionals in the area.

It is important to protect your interests in a divorce involving a professional practice and to ensure your attorney has the experience, legal skill and expertise to represent a professional or their spouse in a divorce. We invite you to review the recommendations of our clients and the legal industry and contact us or call Burke & Domercq at 760-389-3927 to schedule an appointment with one of our proven Certified Family Law Specialists.