A professional services business (such as a law firm, an accounting firm, a medical practice) derives its revenue from the labor and skill of its individual owners rather than from its hard assets (ie. an apartment building derives review from the rental units, a cable company derives revenue from the cable lines).  Accordingly, professional services company are “asset light” and derive most of their revenues from the “goodwill” of the business.  The Nevada Supreme Court has defined goodwill as “a reputation that will probably generate future business.”

As such, even though the goodwill of a professional services business is directly tied to the name and reputation of the service provider, goodwill in Nevada will be considered community property to be divided by the court.  Therefore, the value of the professional service practice will equal the value of the hard assets (such as computers, desks, real estate, etc.) plus the value of the goodwill.  The court can use any reasonable method value both the hard assets and the goodwill of the business.  For example, goodwill can be valued as three (3) months’ of gross receipts that the professional services business generates.

No one is better qualified to help you through the intricacies of your professional business valuation and division through the divorce process than Mr. Lin who not only possesses an MBA from a top ten business school, but also has real world business acquisition experience.

The attorneys at Lin & Associates (702-DIVORCE) are ready to ensure that your rights under Nevada law are fully protected.