Here is how it goes: The value of the goodwill at a certain point in time is to be calculated under the presumption/hypothesis that the practice is sold. Relevant is thus the price which can be

*realized*on the market. Presume there is an investor considering buying the practice and letting do the work by an

*employed professional person*. The the salary B of the employed person corresponds to the value of the work contributing to the earnings. The rest is thus the profit of the goodwill. Start with the net earnings A of the practice per year and presume that a fraction of 10% thereof depends on the person of the owner to such an extend that it would not be realizable after a sale. A rough estimate of the earnings after the sale would therefore be A*0,9. Then, subtract the value of the work B contributing to the annual profit to obtain C=A*0,9-B.

This value corresponds roughly to the profit resulting from the goodwill the invesor may expect in the year after the acquisition.

It has to be multiplied with a factor F corresponding to the number of years in which the goodwill will be sustained. For the dentist's practice, the BGH has presumed a time of three years, wherein the profits of the second and the third year have to be discounted based on the basic banking interest rates, the general enterperneurial risk yielding a factor F sligthly below 3, in this case F=2,7620. The overall formula for the value V of the practice is thus

*V=A(*0,9-B)*F*.

In view of the typically long-term relations between patent attorneys and clients, the sustainability time for a patent practice could be set to a value higher than 3 years. However, for times beyond, say, 8 years, the discount factors (general enterpreneurial risk ... ) result in a very low weight in the overall sum such that factors F of more than 5 are unrealistic. For B, the salary of an employed patent attorney with some years of experience may be put in, i.e. something between 100kEUR and 120kEUR. However, I am not sure about this because I have never been employed.

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