CALIFORNIA FAMILY LAW
...Business Interests
......Goodwill
.........Valuation Methods
............Excess Earnings
 10 Cards On This Topic:
  • Excess earnings method explained.
  • Capitalization rate for professional practices.
  • Determining capitalization rate for excess earnings approach.
  • Excess earnings approach should be used only if no better approach available.
  • Compensation surveys may be used as guidelines for determining reasonable compensation where they account for similarly situated professional practices and practitioners.
  • "Similarly situated professional" standard properly used to calculate goodwill using excess earnings method.
  • Error to value goodwill by taking just one year of earnings, especially where income from practice is volatile.
  • May not determine reasonable compensation for excess earnings method by reference to national surveys.
  • Excess earnings method explained.
  • Error to find no goodwill in medical practice when excess earnings exist.


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