Valuation of Private Investigation Firm

The Pennsylvania Superior Court’s 2007 decision in Dalrymple v. Kilishekis relatively unremarkable from a valuation perspective. The subject business was a private investigation firm owned by the husband, which was the chief marital asset. Apparently its assets, which were valued at $45,000 as of the date of separation, were mostly or entirely dissipated by the time of trial. Since there were few or no assets left to distribute, the trial court applied the concept of “equitable reimbursement,” requiring Husband to pay Wife 60% of the DOS value of the business in installment payments over time. Additionally, Wife received an award of alimony based upon the gap between her income and her reasonable needs.

The husband argued that the trial court had erred in its valuation of his business, but his argument was deemed waived for failure to cite relevant authority in his brief. The Superior Court also noted that he had not produced business records in discovery, citing confidentiality of his clients’ matters. The Superior Court noted that the records could have been produced in a redacted or summary form. For these reasons, the trial court’s decision was sustained.

One issue that did not arise in this decision is personal vs. enterprise goodwill. A private investigation firm would seem to be a good example of a business whose goodwill is not transferrable. Therefore, a capitalized earnings approach may not have been fruitful in determining the value of the business. This issue was not reached by the Superior Court, however.