The Florida Bar

Florida Bar Journal

Asset Valuation and Personal Goodwill


I recently read “The Issues Under Florida Law Relating to ‘Personal Goodwill’ in a Dissolution of Marriage, Part II” (November/December 2019) and found some errors I believe are worth noting. Specifically, the fourth paragraph states, “The rulings in these cases [Thompson] further limit an appraiser’s ability to utilize other widely recognized valuation methods, such as the capitalization of earnings method.[8]”. ([8] Thompson, 576 So. 2d at 270 (the capitalization of earnings method is defined as the fair market value of what a willing buyer would pay a willing seller, neither acting under a duress, prescribed this method as the exclusive method of valuation)).

My review of Thompson does not find such language. Rather, Thompson states, “Numerous methods for valuing goodwill have been advanced in cases and the literature on this subject. E.g., In re Hall, 103 Wn.2d 236, 692 P.2d 175 (1984) (recognizes five methods of valuation). The clearest method would be the fair market value approach, which is best described as what would a willing buyer pay, and what would a willing seller accept, neither acting under duress for a sale of the business. The excess over assets would represent goodwill.”  Thus, the capitalization of earnings is not the exclusive method. It is only one method under the income approach available for use.

I am not certain of the cause, but this is an important fundamental issue in valuation, and I hope that readers are not misled. There are various methods under the three accepted approaches (asset, income, and market) in business valuation.  While I agree that market data does not provide an “apples to apples” comparison sometimes because personal goodwill is not always specifically allocated, there are various methods (e.g., bottom-up, top-down, and with/without) that are available to appraisers. The writers state in the 10th paragraph the following, “As in Kearney, many experts, having no alternative method, turn to the only credible valuation methodology: the ‘adjusted net asset value method.’[17] Resulting is a valuation without any intangible asset value, not simply personal goodwill.” However, there are several articles and periodicals that deal specifically with intangible asset valuation. ASC 805 sets the criteria for intangible assets and is also available to appraisers.

Josh Shilts, Jacksonville