When valuing a small or family-owned business in a Virginia divorce, parties need to be aware of the concept of “goodwill.” Goodwill is divided into two main types: personal goodwill and professional goodwill. Though sometimes hard to tease apart, once a judge determines how much of each type of goodwill is contributing to the value of a divorcing-spouse’s business, that ruling can be monumental to the financial well-being of the husband and wife.
Settling a divorce case in Virginia, where one of the parties owns a business, can be extremely challenging. Businesses are considered “property” and, just like a house or a retirement fund, are divisible upon divorce. Therefore, in a mediated divorce settlement, the value of a family business must usually be quantified in order for both parties to make informed decisions with regard to which party retains which asset/liability post-divorce.