The Ins and Outs of Average Annual Value for Goodwill in Partner Buyouts
And why new partners may not like it.
By Marc Rosenberg
Retirements & Buyouts
When trying to calculate the goodwill payable to a retiring partner, one option is the AAV method.
The letters stand for “Average Annual Value,” but these words don’t adequately describe the system. I’ve always felt that a better name would be “cumulative value method,” as you will see.