OUR BLOG

The Level Perspective

Home / Blog / Business Valuation / Clampitt v. Clampitt: Key Business Valuation Lessons from a Recent Case

Business Valuation in Divorce

Clampitt v. Clampitt: Key Business Valuation Lessons from a Recent Case

In the complex world of business valuation, legal cases often provide critical insights into how courts interpret key valuation principles. One such case, Clampitt v. Clampitt (2023 S.C. App. Unpub. LEXIS 381), highlights important nuances in enterprise vs. personal goodwill and the treatment of post-filing business changes in equitable distribution.

Case Background

The case involved a business called CLEATT, owned by the husband (H), which specialized in managing auto-dealer promotions. The business generated revenue based on auto financing obtained during these events.

However, after the divorce filing, H created a competing business with his mother, leading to a decline in CLEATT’s value as it lost opportunities to the new entity. H argued that the Family Court (FC) should recognize this reduced value when determining the division of marital assets.

Court's Ruling

The Family Court rejected H’s argument, ignoring the business’s post-filing decline in value and awarding him the business as part of his distributable share. H appealed, contending that:

The family court erred in dividing marital assets and debts
The court’s errors warranted a reversal of attorney fees awarded to W

However, the Appellate Court upheld the Family Court’s decision, stating:

The change in business value was attributable to H’s actions
The Family Court properly accounted for personal goodwill in its valuation
The valuation fell within the range of expert testimony presented

The decision reinforced principles from Moore v. Moore (414 S.C. 264, 631 S.E.2d 533, 544 (2015)), which distinguishes:

Enterprise goodwill – a marital asset subject to equitable division
Personal goodwill – tied to an individual’s skills and not subject to division

Level Perspective

This case offers critical takeaways for business valuation professionals:

Enterprise and personal goodwill must be clearly identified and valued in marital dissolution cases.
Post-filing dissipation of assets will not be rewarded. Courts may hold parties accountable for intentional actions that devalue a business.
The valuation presented must align with recognized standards. The Family Court’s ruling was upheld because its valuation remained within the expert range.

Final Thoughts

The Clampitt v. Clampitt decision highlights the importance of accurate goodwill valuation and the risks associated with post-filing business changes. For valuation professionals and legal experts, this case serves as a reminder that courts will scrutinize whether financial changes are genuine or strategically engineered during divorce proceedings.

This article is based on analysis from Business Valuation Resources (BVR), the definitive source for valuation insights. Learn more at bvresources.com

Note: This article is for informational purposes only and is not to be used for commercial purposes.

Find out more about how we can help you by contacting us today.

Topics

Contact

See how we help you with a matter that requires forensic accounting support.

Request a Consultation

We’ll work closely with you to understand your needs. Find out more about how we can help you by contacting us today.

"*" indicates required fields

Services