Thе principal issue in these cross-appeals from an order of equitable distribution is whether “good will,” found by the hearing court to be an asset of a closely held corporation, can be excluded from marital property by the court in equitably distributing shares of stock in that corporation.
Dеbra Ullom and R. Garth Ullom were married on November 26, 1977. From 1972 until the present, and throughout the marriage, husband was employed at Cumberland Valley BMW, Inc., a closely held corporation of which husband’s father is president and the majority shareholder. The corporation is a car dealership, engaged in the business of selling BMW and Subaru automobiles. Husband is currently vice president of the corporation, earning approximately $60,000.00 per year in that capacity and also from his earnings as a professional race car driver. Husband is the holder of fifty (50) of the 410 outstanding shares of the corporаtion’s stock. Wife is a graduate of Cornell University, and during the marriage was employed full-time at Cumberland Valley BMW, Inc., earning a salary of $20,000.00 per year. During the marriage, the parties acquired a one-fourth interest in a travel agency business, First World Management of Pennsylvania, which they be *517 gan with three other couples and where wife currently is employed, earning approximately $9,000.00 per year. No children were born of the marriage. The parties were divorced in a bifurcated proceeding on February 19, 1988. The matter of equitable distribution of the parties’ marital assets was referred to a master, who held a full hearing and filed his recommendations on November 10, 1987.
At the hearing before the master, wife presented the report and testimony of William Boles, CPA, which placed a value of $147,150.00 upon the husband’s shares of Cumberland Valley BMW, Inc. This sum he arrived at by applying a capitalized earning method and an industry average operator’s margin method. He testified that he capitalized the corporation’s excess earnings at ten (10%) percent to estimate a good will value of $1,295,130.00 and placed an overall value of the corporation’s stock at $1,609,428.00. He then discounted the stock by 12.5% because of its lack of marketability and further discounted husband’s minority shares by 12.5%, arriving at the conclusion that husband’s shares had a market value totalling $147,150.00. Husband’s expert witness, Michael Menear, a CPA and accountant for the corporation, valued the entire corporation at its book vаlue of $355,583.00. He testified that the stock should be valued under the stock purchase agreement at the price at which husband had purchased the shares plus a seven (7%) percent incremental increase per annum. He also valued the stock using an industry average return on tangible assets of 15.7%, a capitalization rate of 15% and a discount factor for husband’s minority interest of 50%. By averaging these two methods, husband’s expert witness arrived at the value of husband’s stock as $21,000.00. This valuation did not include good will as an asset in evaluating the corporation or in valuing the stock. The master acceрted the value placed on the stock by wife’s expert and determined that the stock should be distributed between the parties at a value of $147,150.00. Husband filed exceptions to the master’s recommendations, and the hearing court *518 altered the distribution suggested by the master. It entered the equitable distribution оrder from which both husband and wife have appealed.
The hearing court valued the marital estate at $102,-462.00 and made the following distribution of property in kind to the parties:
To wife:
First World Management of Pennsylvania stock $20,000.00
Farmers Trust Company bank account 2,000.00
BMW automobile 10,000.00
Personal property in the residence 18,000.00
$50,700.00
To husband:
Cumberland Valley BMW, Inc. stock $32,523.00
Commonwealth National Bank account 5,039.00
BMW automobile 9,000.00
Shelby automobile 5,200.00
$51,762.00
In order to effect a division of property of sixty-five (65%) percent to wife and thirty-five (35%) percent to husband, the court ordered husband to make an additional payment of $15,900.30 to wife.
The principal issue raised by wife on appeal is whether the court erred in its distribution of the fifty shares of stock of Cumberland Valley BMW, Inc. Wife argues that the court acknowledged that good will is a corporate asset to be included in the valuаtion of a corporation, but incorrectly excluded that asset in distributing the marital property. 1 Wife also raises other issues regarding the valuation of *519 personal property, 1 2 as well as the court’s denial of her request for alimony, counsel fees and costs. Wife concedes, however, that these additional issues have been raised only to balance the distribution should gоod will be excluded from the distributed assets. Because of our disposition of the wife’s first issue, we need not discuss her remaining issues at length. Husband, on cross-appeal, challenges the trial court’s determination that the stock of Cumberland Valley BMW, Inc. was marital property, arguing that he obtained the stoсk prior to the marriage and that, therefore, it should have been excluded from the distribution of marital assets.
On appeal from an order of equitable distribution, this Court’s scope of review is limited to a determination of whether the hearing court abused its discretion.
Winters v. Winters,
First, we must address whether the hearing court erroneously included the stock of Cumberland Valley BMW,
*520
Inc. in the marital assets. Husband argues that one month prior to his marriage he contracted to buy this stock and obtained a loan from his father to do so. The hearing court found, however, that the corporation had merely entered into a stock\ purchase agreement with husband on that date which
allowed
him thereafter to purchase fifty shares of stock at $200.00 each, a total of $10,000.00. The court further found that marital funds had been used to pay for the subsequent purchase of the stock. After the final payment was made, the corporation issued a stock certificate to husband on February 27,1980. The court concluded that the stock was an asset which had been аcquired during marriage and that it was, therefore, marital property. This finding is amply supported by the evidence. The “[t]ime of acquisition is the factor that the legislature mandates the courts use in determining whether property is a marital asset.”
Anthony v. Anthony,
Husband also contests the heаring court’s determination that the restriction on the stock did not set its value. The restriction provided:
The stock so sold shall be restricted so that it cannot be transferred to a third party without first offering it to the Corporation. Additionally, the Corporation will be obligated to repurchase the shares upon termination of employment of any of the aforesaid employees for a price equal to their cost plus an increment of 7% per annum.
The court found that this provision did not limit the value of the stock but only required the seller to offer the shares to the corporation. The evidеnce supports the court’s interpretation that if the corporation was unwilling to pay the *521 seller’s asking price, the seller was free to sell to another buyer.
The next issue presents a more difficult problem. The hearing court, in rejecting the master’s recommendation to distribute the stock at a value which included good will, cited
Beasley v. Beasley,
On the facts of the case sub judice we are satisfied that the formula used to estimate the value of the goodwill of Cumberland Valley BMW, Inc., as set by wife’s accountant is not subject to an automatic exclusion for equitable distribution purposes. The question now becomes whether that estimated amount of goodwill should be utilized on the facts of this case for equitable distribution purposes. That requires an analysis of the factors we must consider in dividing marital property under Section 401(d) of the Divorce Code.
The court then proceeded to analyze the factors involved in this case, including the relative ages, education, incomes, and potential incomes of the parties, and determined that good will should not be considered as a factor for distribution purposes. This, we hold, was error.
Although the Pennsylvania courts have not ruled on the specific issue presented in the instant case, some guidance has been offered in similar situations. Good will has been defined as “the favor which the management of а business has won from the public, and probability that old customers will continue their patronage.”
White v. Rairdon,
52 D. & C. 558, 559 (Delaware County 1944). In
Buckl v. Buckl,
*522
Good will is property of an intangible nature and constitutes a valuable asset of the business of which it is part, unless in the particular instanсe it is of too uncertain and contingent a nature to be appraised. Often a large portion of the intrinsic marketable or assessable value of a business consists of its good will. However, good will cannot be separated from the business in which it inheres, nor can it be disposed of indepеndently from the business. It has no existence as property in and of itself, as a separate and distinct entity, but only as an incident of a continuing business having locality or name.
38 Am.Jur.2d Good Will § 3. Good will is a corporate asset and may not be separated from the other assets nor ignored *523 in determining the value of a corporate business. 3 See: Buckl v. Buckl, supra.
After the court hаd found good will to be a corporate asset, it was improper to exclude it in determining the value of the assets available for distribution. The factors considered by the court under § 401(d) of the Divorce Code 4 are intended to provide guidance in equitably distributing the assets accumulated during the marriаge; they may not be used to exclude assets from the pool of marital property. When the court found that the valuation of the corporation included a value for good will, it erred in accepting the reduced “book value” for the purpose of valuing the stock for distribution. We must therеfore reverse and remand for a redetermination of the value of husband’s interest in Cumberland Valley BMW, Inc. 5
Whether to award alimony,
6
counsel fees and costs
7
to a party in a divorce action is within the sound discretion of the hearing court, whose decision will not be reversed absent an abuse of discretion.
Mazzei v. Mazzei,
Reversed and remanded for further proceedings consistent with this opinion. Jurisdiction is not retained.
Notes
. After determining that no estimated good will value of the stock would be distributed to wife, the court valued the shares at the bоok value reduced by 25% for husband’s minority interest and the lack of marketability of the shares as part of a close corporation. The court concluded that the total value of the husband’s fifty shares equalled $32,523.00.
. Wife states that the court erred in valuing personal property distributed to her at §18,000.00 without adjusting for depreciation. However, prior to the master’s hearing, the parties stipulated to the value of the personal property at this figure. Wife cannot now retract that stipulation on appeal.
. Husband relies on
Campbell v. Campbell,
. Act of April 2, 1980, P.L. 63, No. 26, § 101, 23 P.S. § 101, et seq.
. The trial court stated in a footnote that wife’s expert had failed to testify that his estimated value of good will was based on generally accepted accounting principles. The court also later referred to the good will value as "speculative.” However, the hearing court determined that because it excluded good will on the facts of the case, the accuracy of the expert’s valuation did not need to be further explored. Because we reverse the hearing court’s basis for its distribution, we are unable to determine what good will value, if any, would have been accepted by the hearing court.
. 23 P.S. § 501.
. 23 P.S. § 502.