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client turnover factor does not overlap the effect of
death, retirement, and relocation.
Respondent introduced the expert report and testimony
of Mr. Paul Meade. In summary, Mr. Meade concluded that
the amount paid by petitioner for the seller's accounting
practice should be allocated as follows:
Going concern $16,000
Goodwill --
Client list 145,225
Non-compete covenant --
Total 161,225
As depicted above, Mr. Meade concluded that approximately
10 percent of the amount paid by petitioner, $16,000, must
be allocated to going-concern value and the remainder,
$145,225, must be allocated to the client list. Mr. Meade
also concluded that the useful life of the client list in
petitioner's accounting business is at least 15 years.
Mr. Meade used an income analysis in order to compute
the useful life of the subject client list in petitioner's
business. Based upon published industry figures, he
concluded that a business like the seller's accounting
business would realize "operating income" before the
owner's salary in the amount of 40 percent of gross
receipts. In view of the fact that the subject agreement
calls for petitioner to pay 25 percent of the gross
receipts to the seller for 48 months, Mr. Meade concluded
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