Tony Garvy, ASA and James Arogeti, CFA recently co-authored the article, “Personal Goodwill: Can We Limit the Subjectivity” in the DuPage County Brief Magazine (February 2021):

“[G]oodwill is the value of a business or practice that exceeds the combined value of the physical assets.” 1 This definition stated in Marriage of Talty2 seems so simple, yet it opens the door to much interpretation and debate. The debate focuses on the allocation of the goodwill that separates what can be non-marital assets from marital assets, and thus, what can be valued and divided between divorcing parties. A recent unpublished Appellate Court opinion, In re Marriage of Preston, 3 demonstrates the types of issues the courts continue to wrestle with in dealing with this allocation of the Goodwill. In Preston, the court dealt with dueling experts with different methodologies for allocating the Goodwill of a company between Personal Goodwill and Enterprise Goodwill; one using the Multi-Attribute Utility Model (“MUM”) approach and one using the “with-and-without method.”4 Herein, we present the legal background for the allocation of Goodwill and methodologies for its allocation.

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