User-Friendly Guide to Dental Practice Valuation in a Colorado Divorce

By Matthew C. Clawson, Colorado Family Law Attorney

Divorcing a dental practice owner involves financial and legal complexities that go far beyond a typical Colorado divorce. Whether you live in Colorado Springs, Pueblo, Parker, or Denver, the value of a dental practice is often one of the most important and most debated issues in the entire case. A dental practice is not a simple asset. It includes equipment, staff, hygiene revenue, patient relationships, branding, and the dentist’s personal skills. Colorado law requires a careful distinction between marital and nonmarital components before any division can take place. This guide explains the process in a clear, user-friendly way so spouses understand their rights and know what to expect.

Why Dental Practice Valuation Matters in a Colorado Divorce

Dental practices include both tangible items and intangible value. Equipment and accounts receivable are easy to measure. The much harder part is evaluating reputation, long term patient retention, hygiene driven income, and the effects of branding and staff. These factors are particularly important in growing communities such as Colorado Springs and Parker, where patient flow is strong, as well as in larger metropolitan practices in Denver and Pueblo with multiple providers or long-standing community recognition. Before a court can divide marital property, it must understand which parts of the practice are separate and which parts were created or expanded during the marriage.

Personal Goodwill and Enterprise Goodwill

In Colorado, goodwill can significantly influence valuation and must be separated correctly. Personal goodwill refers to the value that exists because of the dentist personally. This includes clinical skill, bedside manner, patient loyalty, personal reputation, and the trust built within local Colorado dental communities. Personal goodwill belongs exclusively to the dentist and is not marital property.

Enterprise goodwill refers to the value of the practice as a functioning business. It includes staff experience, long term hygiene revenue, marketing, brand recognition, patient systems, operational efficiency, and the ability of the practice to produce revenue regardless of which dentist provides treatment. Enterprise goodwill is considered marital property. This distinction matters greatly, especially in Denver, where group practices are common, or in Colorado Springs and Parker, where hygiene revenue and recurring patient flow often strengthen enterprise-based value.

Why Spouses Need a Financial Expert

Dental practice valuation requires expertise. A certified valuation professional ensures that the practice is neither undervalued nor inflated. The expert examines financial documents, production data, patient retention, practice management reports, staff structure, and long-term profitability trends. The expert also analyzes whether the practice depends heavily on the dentist or whether it functions as an independent business. This analysis protects spouses from accepting inaccurate numbers and ensures that enterprise goodwill is correctly measured.

Differences between communities matter. For example, Pueblo practices may rely more heavily on the owner dentist, while Denver practices may have higher enterprise value due to multiple providers. Valuation professionals take these regional differences into account.

How Experts Analyze a Dental Practice

A valuation expert examines several years of tax returns, profit and loss statements, balance sheets, accounts receivable aging, patient retention numbers, hygiene revenue patterns, new patient flow in competitive markets such as Parker, staff payroll, associate productivity, and equipment values. Experts study practice management records to determine real income levels and identify trends that may affect future profitability. This information forms the foundation for determining both the marital value of the practice and the dentist’s true earning capacity.

How Goodwill Affects Property Division

Colorado law does not allow non-dentists to own a dental practice. This means the spouse will not receive a share of ownership. Instead, the spouse may receive financial compensation through a division of home equity, retirement accounts, cash equalization payments, or structured payouts over time. In cities such as Colorado Springs and Denver, where practices often have significant enterprise goodwill, the practice valuation can heavily influence how other assets are divided.

How Goodwill Affects Support Calculations

Goodwill valuation also plays a major role in determining spousal maintenance and child support. The expert evaluates the dentist’s true earning capacity, including W2 income, business distributions, hygiene revenue, associate coverage, and fringe benefits. Many dentists in Parker and Pueblo participate in DSO negotiations or consider DSO sales. These changes can influence income and must be analyzed accurately to ensure that support calculations reflect long-term earning ability rather than temporary or manipulated financial conditions.

Practical Steps Spouses Can Take

Spouses do not need to be financial experts, but awareness helps the process. Keep track of any changes in the dentist’s income or work hours. Pay attention to discussions about selling the practice or joining a DSO. Note whether the practice is branded with the dentist’s name or operates under a more general business name. Document lifestyle patterns and spending habits. Share any financial information you have legitimate access to with your attorney. Avoid direct confrontation about business records, as your attorney and valuation expert will handle all information gathering.

Final Thoughts

Dental practice valuation in a Colorado divorce requires specialized legal and financial experience. Whether the case is in Colorado Springs, Pueblo, Parker, or Denver, the distinction between personal and enterprise goodwill can dramatically affect the division of marital property, spousal support, child support, and long term financial security. With the right attorney and a qualified financial expert, spouses can ensure that the valuation is accurate, the analysis is fair, and their share of the marital estate is protected.

We can be reached at www.clawsonattorney.com, and Matthew can be contacted directly at Matthew@clawson.law. For more information about our top rated legal services, fill out our online form or call 719-471-7050 or 303-805-9353 to schedule a free initial consultation.