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Massachusetts Law - How is Goodwill Counted? Goodwill arises when the business is worth more than the tangible assets. Things such as reputation, a desirable location, a unique product, and so on, can all-but-guarantee an earnings stream, and so make the business have more value than simply its tangible assets. The court will take account of the goodwill in valuing a business. Cases: Fechtor (1989) 534 NE2d 1 (The husband founded a stock brokerage. The wife had been the office manager. In 1984, the year she left the firm and the marriage disintegrated, the husband's earnings had been over $300,000. The judge accepted a valuation approach that applied a multiplier of 2 to net worth, then discounted by 15%, because the husband owned a minority interest. There was a restriction on transfer, but the judge was entitled to accord it relatively minor weight. There was also a tax issue. The judge was not given after-tax numbers to consider, with respect to liquidation of certain assets, and so it was acceptable for the judge not to consider the tax effects. The court also awarded alimony of $2,000 per month for 3 years or, if earlier, until the wife secured full time employment.)
Disclaimer: We are not giving legal advice. No warranties. We disclaim all legal liability. More... Click here to go to top Massachusetts legal page. Click here for the Massachusetts divorce legal table of contents. | |||||||||||||||||||||||||
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