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How do I value a medical practice in divorce?

On Behalf of | Mar 11, 2022 | Divorce |

The divorce process can be fraught with emotions, but it’s also a major financial transaction. If improperly handled, you could find yourself at a financial disadvantage for a long time to come. This is especially true if you and your spouse have significant assets, such as when your spouse owns a medical practice.

How is a medical practice divided during divorce?

California is a community property state, which means that your marital assets should be divided evenly. When it comes to a medical practice, then, much of the focus is going to be on the value of the practice. There are several ways to determine this value, but assessing fair market value may be the best option.

To determine fair market value, you essentially try to determine what the practice would sell for in the current market. This means finding comparable practices that have sold and making a determination based on any differences between those practices and the one in question. Given that practices aren’t sold all that often, this can be a tricky way to obtain an accurate valuation. However, there are a number of considerations that can be helpful in making this determination, such as:

  • The value of equipment
  • The number of patient accounts
  • Historical revenues
  • Land value, if the property is owned
  • The business’ goodwill

Be on the lookout for hidden assets, too, when you assess valuation. Your spouse may be falsifying losses in an attempt to reduce the amount of compensation that you receive through your divorce.

Find help with your property division

The property division process can certainly be stressful and complicated, which is why it’s best not to handle these matters on our own. Instead, it may be beneficial to work closely with an attorney who can fight to ensure that your financial interests are as fully protected as possible under the circumstances.