Pesce Law Group, P.C.

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Business and Divorce Attorneys in DuPage County

Naperville, IL Business and Divorce Lawyers

In many relationships, a jointly-owned business may be the family's primary, or solitary, income source. During a divorce, the two most significant issues are typically professional goodwill and business valuation. The earnings must be divided as part of the property settlement; goodwill must be properly categorized as marital or non-marital property; and a market value must be established.

At Pesce Law Group, P.C., we understand that these businesses have emotional value in addition to their financial value. We take the time to listen to you and learn more about your goals and aspirations in a particular situation. Afterwards, we take prompt and sustained action to protect your legal and financial rights, both inside and outside the courtroom.

Business Goodwill

A business' reputation in the community, and more importantly, among its customers, may be its largest asset. To properly add value to the business for divorce valuation purposes, that goodwill must be properly classified.

  • Enterprise Goodwill: Some businesses, especially franchise businesses, have goodwill that stems from the name itself. For example, most customers do not eat at a certain chain restaurant because of the owner's name. In these situations, the goodwill is considered part of the marital estate.
  • Personal Goodwill: Especially in service or professional enterprises, like a law firm or a hair salon, goodwill may stem from the owner's name. For example, if the husband no longer operates Husband's Barber Shop, existing customers may leave. In these instances, the business goodwill is non-marital property.

Personal goodwill can be considered future income earning ability, so it is often a factor in a maintenance award, if not the overall property division.

Business Valuation

Illinois courts generally use one of three basic models to determine business value:

  • Market Approach: Much like "comparables" in a real estate sale, this approach looks to the recent purchase or sale of similarly-situated businesses.
  • Asset Approach: As the name implies, this method looks only at the company's fixed assets. Since it ignores cash flow and intangible assets, this approach is not appropriate in many situations.
  • Income Approach: The is method is essentially the opposite of the asset approach, and the business' income over a set period of time is the determining factor in its value.

Other Issues

If the parties jointly own the business, as is often the case, the court will determine whether the now ex-spouses can continue to operate it, or whether the business should be sold. The law regarding business valuation is constantly evolving, so your attorney should be fully informed of the latest developments.

At Pesce Law Group, P.C., our professionals regularly attend seminars and other continuing education events. Contact us today at 630-352-2240 for a free consultation. We serve families in and around DuPage County.

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