Personal goodwill and how to make it impersonal
Luke Moore
Co-founder of Dental Elite, Luke Moore, explains the negative impact of personal goodwill, and how it can be made impersonal to improve the outcome of your sale. As a practice owner you’ll know all about goodwill and its impact on the perceived worth of your business to potential buyers. What you might be less familiar with, however, is the concept of personal goodwill, which is the term used to describe the value that is generated from your own personal abilities, skills, experience, contacts and reputation. If you didn't know any better, you might be fooled into thinking that the greater the personal goodwill the better the value of the business, but in reality it has the opposite effect. Indeed, where an individual has built up a lot of personal goodwill the business can appear more unattractive to potential buyers, which in turn has a negative impact on the overall valuation and worth of the practice. This is because the worth of the business lies within the value of the tangible and intangible net assets that can be transferred to the new owner. This might require you to stay on after the sale as an associate or adviser to transition your personal goodwill.

20th Anniversary Magazine