Husband’s Firm Had Value Despite Claim It Was All Personal Goodwill

Tennessee case summary on business valuation in divorce.

The husband and wife in this McMinn County, Tennessee, case had been married for more than 20 years before the husband filed for divorce, and the wife made a counterclaim for divorce.  The children were adults, so the case focused on alimony and property division, as they had acquired a substantial amount of wealth. The wife had worked as a realtor, and the husband had worked as a financial advisor.  His work was through a business named CLG Weath Management, LLC, of which the husband was the sole owner.

A critical issue in the case was the value of CLG, and the parties jointly retained an expert to assist with valuation.  A few months later, the wife learned that the husband had retained a different expert to perform an independent valuation using different methods.  At that point, the wife hired her own independent expert, and at trial, both of the independent experts testified.

The CLG business was built primarily on the husband’s relationship with clients.  While he had an administrative employee, and was associated with a firm to purchase securities, the husband was the only one to provide investment advice.

The husband testified that his compensation came in three basic forms.  A small percentage was from commissions on sales.  There were also “servicing trails,” which amounted to ongoing commissions.  The bulk of compensation came from a quarterly advisory fee, which was paid directly by clients.

The husband’s expert pegged the value of the business at $57,000, noting that it was a “personal goodwill business” of a “team of one.”  Value of business assets came down to furniture and equipment.

The wife’s expert, on the other hand, applied the income approach, who opined that the business was salable.  The approach gave a value of $398,000, which included the firm’s “enterpprise goodwill.”

The trial court, Judge J. Michael Sharp, determined that the wife’s expert had taken the most accurate approach.  After reviewing some reports, the court ultimately valued the business at $367,000.  The husband then brought an appeal to the Tennessee Court of Appeals, which began its decision by noting that valuation is a factual issue, and the trial court’s finding is given great weight on appeal.

It also noted that when values are conflicting, the trial court must use one within the range of values supported by the evidence. 

The husband argued that the goodwill of the business, apart from his own personal goodwill, was negligible.  But the trial court, despite husband’s arguments to the contrary, ruled that, at the very least, the trail income and client list could be sold.  Because the evidence of value was conflicting, the trial court acted properly in finding a value within the range presented.

For these reasons, the Court of Appeals held that the evidence did not preponderate against the lower court’s findings.  It therefore affirmed.

No. E2023-00615-COA-R3-CV (Tenn Ct. App. June 30, 2025).

See original opinion for exact language.  Legal citations omitted.

To learn more, see The Tennessee Divorce Process: How Divorces Work Start to Finish.

To learn more, see Business Valuation in Tennessee Divorce.