Doctors with Private Practices and Divorce: Key Issues to Consider
By Ribet Myles Family Lawyers – Specialists in High-Value and Complex Divorce
For many doctors, private practice represents years of work building a professional reputation, referral relationships and a valuable source of income. In some cases, it may also involve a substantial business, specialist medical equipment, clinic premises and other significant assets.
When divorce arises, however, understanding what a private medical practice is actually worth can be complicated.
A successful practice may generate substantial income without necessarily having an equivalent capital value. Much of that income may depend on the doctor's personal expertise, reputation and continued work. In other cases, there may be a valuable business capable of operating independently of its owner.
The value may also sit in several different places. A practice may own valuable specialist equipment or property while having relatively little transferable goodwill. At the same time, the doctor's future income may need to be considered separately from the value of the practice itself.
Understanding these distinctions can be critical when reaching a fair financial settlement.
At Ribet Myles, we regularly advise doctors, consultants, surgeons and other medical professionals on complex financial settlements involving private practices, business interests and multiple sources of income.
Disclaimer: This article is for general guidance and does not substitute legal advice. Always consult a specialist family lawyer.
Key points: private medical practices and divorce
A private medical practice may be relevant both as a business asset and as a source of income.
A high private-practice income does not necessarily mean the practice itself has an equivalent capital value.
Value may lie in the operating business, specialist medical equipment, property, cash and transferable goodwill.
A doctor's personal reputation and referral relationships may generate substantial income without necessarily representing a business asset that can be sold.
Practice premises may sometimes be more valuable and more readily realisable than the operating business.
A spouse is not automatically entitled to half of a private medical practice in a divorce, nor does divorce automatically mean the practice must be sold. Each case will turn on its facts.
Is my private medical practice considered in a divorce?
When considering a financial settlement on divorce, the court looks at the parties' overall financial circumstances. A private medical practice, company shareholding or other business interests may therefore form part of the wider financial picture.
However, that does not mean your spouse automatically becomes entitled to half of the practice, becomes involved in running it or that the business must be sold.
The starting point is to understand exactly what the doctor owns, how the practice is structured, what income it produces and what value exists independently of the doctor's future work in business or property assets.
Does a high private-practice income mean the business is highly valuable?
Not necessarily. This is one of the most important distinctions in private practice cases.
Consider two consultants who each generate £300,000 a year from private work.
The first works from rented consulting rooms. Patients are referred specifically because of the consultant's expertise, reputation and relationships with referrers. If the consultant stops practising, much of the income disappears.
The second owns a branded clinic with employed clinicians, administrative staff, established systems, specialist equipment and referral channels that are not dependent on one individual. The clinic may continue generating significant income even if its owner reduces their clinical work.
Their annual income may be similar, but the underlying businesses may be completely different.
Where can the value of a private medical practice sit?
A private medical practice is not necessarily one asset with one value.
Depending on its structure, the overall value may sit in:
The operating business – particularly where it can generate sustainable profits independently of its owner.
Specialist medical equipment – including diagnostic, surgical and treatment equipment and clinical facilities.
Practice premises – which may be owned personally, jointly or through a separate company.
Business goodwill – including an established brand and relationships capable of continuing without one individual doctor.
Cash and other assets held within the business.
The doctor's ownership interest where the practice has multiple owners.
Some of these assets are considerably more tangible and readily realisable than others. There may be illiquidity issues which need to be addressed as part of the valuation exercise.
What is the difference between personal goodwill and business goodwill?
Goodwill can be particularly difficult to assess in a private medical practice because the success of the business may be closely connected to the individual doctor.
Some goodwill may belong to the business itself. Patients and referrers may be attracted by an established clinic brand, location, clinical team or range of services. That value may continue even if one doctor leaves.
In other cases, goodwill may be much more personal. GPs and other healthcare professionals may refer patients to a particular consultant because they trust that individual's expertise and clinical judgement. Patients may seek out a named surgeon because of their personal reputation.
If that doctor stopped practising, those referrals and patients might not simply transfer to a new owner.
The distinction matters because a personal reputation that generates future work is not necessarily the same as transferable business goodwill that a purchaser would pay to acquire.
What happens to goodwill built up during the marriage?
A doctor may have spent many years developing their professional reputation and private practice during the marriage.
That reputation may generate significant income and contribute to the success of the practice. However, professional skill, reputation and future earning capacity are not necessarily transferable business assets.
The key question may be whether the doctor's efforts have created something of value that can exist independently of them.
Would patients and referrers remain if the doctor left? Could another clinician take over and retain much of the income? Does the practice have an independent brand, referral pathways, other income-generating clinicians or systems and assets that would be valuable to a purchaser?
In some cases, specialist valuation evidence may be needed to distinguish between personal goodwill, transferable business value and future earning capacity.
How is a private medical practice valued in a divorce?
There is no single formula. Depending on the practice, a valuation may consider profitability, assets and liabilities, ownership structure, specialist medical equipment, property interests, cash, transferable goodwill and the extent to which the business depends on the doctor personally.
It may also be important to consider whether the business could continue without its owner and whether there is a realistic market for the practice or the doctor's particular ownership interest.
In most cases, specialist accountancy or business valuation evidence will be required.
Is medical equipment included when a private practice is valued in a divorce?
Potentially, yes. A specialist clinic may have invested hundreds of thousands of pounds in diagnostic equipment, surgical equipment, treatment facilities or operating theatres.
Those assets can have significant value even where the practice itself has limited transferable goodwill.
However, their original purchase price is not necessarily their current value. Ownership, financing, depreciation and realistic resale value may all be relevant, as may whether the equipment has already been reflected in an overall valuation of the business.
Can the premises be worth more than the private medical practice?
Yes. In some cases, the most valuable and readily realisable asset connected to a private practice may be the property rather than the operating business.
A doctor may own the clinic personally, jointly with other doctors or through a separate company. Alternatively, the practice may have a valuable leasehold interest.
A clinic building worth £1 million is fundamentally different from a business valued at £1 million largely by reference to assumptions about future earnings.
The property is a tangible asset that may potentially be sold, transferred or borrowed against. The operating business may be much less liquid and may depend heavily on the doctor continuing to work.
The two therefore need to be identified and considered separately.
Can my spouse claim half of my private practice in a divorce?
Not automatically. There is no rule that a spouse simply receives 50% of the value in a private medical practice because it was operated during the marriage.
The treatment of the practice will depend on the wider financial circumstances, including its value, when and how that value was created, the doctor's ownership interest, liquidity issues, minority shareholdings and discounts, other available assets, each party's needs and the income generated by the practice.
In many cases, the practical solution will not involve dividing ownership of the practice itself. Its value may instead be considered alongside the home, pensions, savings and other assets when reaching the overall financial settlement.
Can my private practice be treated as both an asset and a source of income in a divorce?
Potentially, yes, but the interaction between the two may require careful analysis.
A private practice may have a capital value while also generating the doctor's income. The difficulty can arise where the value attributed to the business is itself heavily based on the future earnings the doctor is expected to generate. Each case will turn on its facts.
Could I be forced to sell my private medical practice in a divorce?
The existence of a valuable private practice does not automatically mean it will have to be sold.
In many cases, preserving a viable income-producing business may be important to the financial position of both parties.
Much will depend on the value and liquidity of the practice, the other assets available, each party's financial needs and whether funds can be raised or business value offset against other assets.
A business may have a substantial value on paper without having an equivalent amount of readily available cash. The distinction between value and liquidity can therefore be extremely important.
Will my divorce disrupt the running of my private practice?
Not necessarily. A financial claim involving a private practice does not automatically give a spouse the right to become involved in its management or acquire an ownership interest.
Where other shareholders or business partners are involved, existing agreements may also restrict how ownership interests can be transferred.
The practical objective will often be to reach a settlement that allows a viable medical practice to continue operating while ensuring its value is properly considered within the wider financial arrangements.
What if I started my private practice before the marriage?
The fact that a practice was established before the marriage may be relevant, but it does not automatically mean the business will be excluded from consideration.
Factors may include what the practice was worth before the marriage, how much it grew during the marriage, how that growth was created, the length of the marriage and whether the parties' needs can be met from other assets.
The treatment of a long-established practice brought into a relatively short marriage may therefore be very different from a business created and developed during a long marriage.
What if I own only part of a private medical practice?
Where a doctor owns a practice alongside other clinicians or investors, the relevant asset is generally the doctor's own interest rather than the value of the entire business.
The percentage owned is only one consideration. Voting rights, profit entitlement, restrictions on transferring shares and the existence of a realistic market for the interest may also affect its value.
A 25% interest in a medical clinic is therefore not necessarily worth exactly 25% of the headline value of the whole business. Discounts may be applicable to minority shareholdings.
What financial information about my private practice may need to be disclosed?
Depending on the structure of the practice, relevant information may include company and management accounts, your tax returns, details of salary and dividends, shareholder agreements, retained profits, director's loan accounts and information about significant business assets and property.
The purpose is to build an accurate picture of both the value of the business and the income it generates.
Questions to consider before reaching a financial settlement
Does the practice have value independently of you? If patients and referrers primarily follow you personally, the answer may be very different from a clinic with an independent brand and clinical team.
Where does the value actually sit? It may be in the operating business, equipment, premises, cash or transferable goodwill.
Are business value and future income being considered separately? The two may be connected, particularly where a valuation relies heavily on the doctor's future earnings.
Is the practice actually saleable? A theoretical valuation and the amount that could realistically be realised are not necessarily the same.
Could the business continue without you? The answer may be fundamental to distinguishing personal earning capacity from a transferable business asset.
Frequently asked questions about private medical practices and divorce
Is my private medical practice considered in a divorce?
Yes, a private medical practice or business interest can form part of the overall financial circumstances considered when reaching a settlement, but that does not mean your spouse automatically receives part of the business itself.
How is a private medical practice valued in a divorce?
There is no single valuation method. The assessment may consider profits, assets, liabilities, equipment, property, goodwill and the extent to which the business depends on the doctor's personal work.
Does a high private-practice income mean the business itself is highly valuable?
Not necessarily. High earnings may depend largely on the doctor's expertise, reputation and continued work rather than on a transferable business capable of operating independently.
Can my private practice be treated as both an asset and income in a divorce?
Potentially. Where future earnings contribute significantly to the valuation of a practice, care may be needed when those same earnings are also considered as a source of future income.
Could I be forced to sell my private practice in a divorce?
Possibly, but sale is not an automatic consequence. The wider assets, financial needs, liquidity of the practice and practical consequences will all be relevant.
What if my private practice depends almost entirely on me?
That may significantly affect its value. A practice whose income largely disappears when the doctor stops working may have a very different capital value from a clinic capable of continuing independently.
How Ribet Myles can help
Private medical practices can raise complex questions about business value, personal goodwill, specialist equipment, property and future income.
At Ribet Myles, we regularly advise doctors, consultants, surgeons and other medical professionals on complex financial settlements arising from divorce. We understand that a successful private practice cannot always be valued or treated in the same way as a conventional business.
Where specialist business valuation or accountancy evidence is required, we work alongside appropriate experts to ensure the financial position is properly understood.
If you own a private medical practice and are facing divorce, understanding the true value and structure of the business early can make a significant difference to the options available.
Call us on 020 7242 6000 to arrange a complimentary 30-minute consultation with one of our experienced family lawyers. The initial conversation can help you identify the key issues in your circumstances, understand what information may be needed and get a clearer sense of the options available before important decisions are made.
This article provides general information about divorce and private medical practices in England and Wales. It is not legal, financial, tax or valuation advice. Every case is different, and advice should be obtained about your individual circumstances before making decisions about a financial settlement.