Three Ways to Calculate Goodwill Payable in Partner Buyouts, None of Them Great

Pen, eyeglasses, calculator and magnifying glass on financial reportsSome methods can damage the firm.

By Marc Rosenberg
Retirements & Buyouts

CPA firms use a number of methods to calculate the goodwill payable to a retiring partner.

Here are three less commonly used.

1. Ownership Percentage

This method has clear detriments. Firms should look at goodwill benefits as deferred compensation. Both current and deferred compensation should be performance-based; ownership percentage is not performance-based and is often highly illogical.

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