Streamlining Goodwill Allocation with the MUM Framework

ARTICLE | March 20, 2025

Authored by Vasquez + Company

When spouses divide a privately held business in a divorce, a central sticking point often involves how to handle goodwill. Goodwill is a broad term used to describe intangible elements of a business – from its reputation in the marketplace to an owner’s specialized expertise. In the context of a divorce settlement, goodwill can be split into two parts. Enterprise goodwill refers to elements linked directly to the company itself, such as its recognized brand or existing systems. Personal goodwill, on the other hand, reflects aspects tied specifically to the individual owner, such as their skills, relationships, and reputation. Properly allocating these components can be complicated, and disagreements often arise over how much of the company’s value is truly separate from the owner.

This is where the Multi-Attribute Utility Model (MUM) comes into play. Borrowed from decision-making disciplines, MUM excels at untangling complex questions. It works by identifying various attributes, assigning them relative importance, and scoring how strongly each attribute applies to a given scenario. By applying MUM to goodwill allocation, business owners, attorneys, and courts gain a more systematic method for distinguishing between personal and enterprise goodwill – lending clarity to an inherently subjective area of valuation.

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Breaking goodwill down into its fundamental attributes and measuring each against real-world indicators is a more transparent way to approach divorce-related valuations. By applying MUM, stakeholders can uncover the true balance of an owner’s personal capabilities and the business’s standalone strengths. This does not replace the expertise of valuation professionals – rather, it provides a roadmap for rolling evidence and expert judgment into a balanced and defensible conclusion. With thoughtful implementation, MUM’s structured methodology can help navigate the complexities of goodwill allocation and ultimately foster fairer, more mutually acceptable settlements.

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