Partnerships – Valuation of Assets on Death of a Partner

There are three phases to the problem of arriving at a final dollar and cents valuation of a deceased partner’s share in a partnership. In their proper chronological order they are: a determination of what the partnership assets are, a valuation of those assets once determined, and a division of the remainder (after liabilities have been subtracted) into the proper proportions according to the partnership agreement. Only the second phase is within the scope of this comment, the purpose of which is to examine various asset valuation methods both with respect to, and in the absence of, a valuation established by the partners themselves. While the determination of asset value in the absence of agreement is largely an evidentiary problem, no inquiry will be made into the admissibility of evidence of value; instead, attention will be centered upon the qualitative importance of that evidence once it is proved. Particular emphasis will be given to the valuation of goodwill where there has been no agreement covering it, such emphasis being justified by the variety of methods evident in the cases.