You can have a business where somebody is a landscaper, and he goes around, has all these customers, and landscapes their yards, and they love them and he’s their best friend. Is somebody going to buy that business from him and pay anything for it? If he steps out of that business, would there be anything there to buy? Maybe he’s got some goodwill. Maybe he’s got some name for his landscaping business, and maybe he could tell all these customers, “Hey, Joe the guy who is buying my business is great. Use him.” Maybe there would be something there.
There might be a value when the business gets bigger. There’s value when there’s goodwill, meaning you could transfer this business and people wouldn’t really care that the owner or the main person wasn’t involved anymore.
When there’s this excess earning where somebody could think: “Wow, if I buy this business, I’m going to make more than a normal person in my position would make. I have a lot more earning potential,” what I like to do is take a quick look with an accountant to save my client some money and see if there are excess earnings or goodwill. The accountant, a good accountant who may also be a business appraiser, will do that for a fairly inexpensive cost, $1,000 or $2,000. If the accountant says, “Yes, I see something here, I see some excess earnings, I see some goodwill,” then it may be prudent and necessary to hire a business valuator.
Laura Schantz, a Beaverton divorce and family lawyer and mediator has helped clients find creative solutions to complex financial matters involving asset division, spousal support, and child support. To learn more about Laura Schantz and her firm, visit www.oregondivorceattorney.com.