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Medical practice valuation often most complex part of divorce

On Behalf of | Feb 6, 2023 | High-Asset Divorce |

As a Chicago physician, you may very well belong to a partnership that owns and operates your medical practice. You may have already spent years growing your practice in terms of both number of patients and reputation within the community. To settle your divorce, you must place a value figure on your practice, but this task requires the services of forensic accountants experienced with the healthcare industry. Due to the financial stakes, you can expect that your estranged spouse will hire an accountant who could arrive at a very different valuation than your expert.

What goes into valuing a medical practice?

The valuation of a business requires analyzing its assets and liabilities. Assets can be both tangible and intangible. Tangible assets include medical equipment, accounts receivable and real estate. A common intangible asset is goodwill, which measures how patients consider your services superior to others. Liabilities are expenses like insurance or loan payments.

How long you have been in practice matters to the valuation of the business as well. From a legal perspective, the time you held the practice before and after the marriage influences the financial outcome of the divorce.

How does the partnership agreement impact the divorce?

The terms of your partnership agreement represent another big issue when settling your divorce. You may be required to inform your partners about the divorce because of the financial implications to them.

The partnership agreement may force you to sell your share of the business to access cash to settle the divorce. Unlike other forms of business, the option of shifting some ownership into the hands of an ex-spouse is not legally permissible. Laws generally require the ownership of medical practices to be exclusively in the hands of licensed medical providers.