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MPB offers a variety of valuation reports and formats. For information on standard services for Buyers & Sellers follow the appropriate link below:
Why are Practices Valued?While the most common reason to value a professional practice is to plan for a sale, practice valuation engagements are performed for a variety of reasons, including the following:
What's the difference between a Valuation and Appraisal?For the most part, the terms valuation and appraisal are used interchangeably for determining the value of a business or practice. In recent years the term 'valuation' has become the more accepted term. However, use of either term is acceptable. The term 'evaluation' is however an incorrect use of the term, and is often confused with the correct term of 'valuation.' A trained professional would never use the term 'evaluation', but rather either valuation or appraisal.
Who does valuations?There are several categories of people that perform valuations:
Each category has its advantages and disadvantages. Although, the better appraisers tend to be educated in business valuation and have an understanding of the various issues involved in valuing a business (e.g., brokerage/sales, finance, accounting).
Why not just have my CPA do it?Accountants often do not have significant experience or training in performing valuations. The vast majority of CPA's nationwide have little or no training or expertise in business valuation. While they are very familiar with financial statements, many are uncomfortable making the forecasts that are crucial to valuation. Further, their experience tends to be in tax value, which is usually quite different than Fair Market Value or Fair Value. They usually do not understand or have real world sales experience in market value; and often do not consider value to a real world buyer or how current practice acquisition loan requirements affect how much a buyer will pay.
How about a general business broker?General business brokers most often use generic rules of thumb to list and sell businesses. However, rules of thumb can be dangerous as they do not take into consideration the specifics of a particular business. Also, many business brokers lack the financial expertise necessary to properly analyze a company's financial statements. Finally, most general business brokers are not familiar with professional healthcare practices and have difficulty assessing variations unique to a given practice.
How about those Valuation Software Programs?Low-end software-driven products should be approached with caution. In general, valuation programs are designed to give quick, and not necessarily accurate answers. Further, by design, they deny the user the expertise of a qualified appraiser's many years of valuation wisdom. While valuation software tools can be an effective time saver in the hands of a trained professional, their use is problematic when used by individuals or untrained part-time appraisers who do not understand the appraisal process or the tool itself. The old axiom of 'Garbage In - Garbage Out' often describes the result. You may find it interesting to know that most certified business appraisers rarely use purchased valuation software as the crucial element in valuation is the experienced interpretation of information.
Valuation OrganizationsThere are four organizations in the United States that certify business appraisers are:
The below table compares/contrasts the certification credentials from each of these organizations. For better quality appraisals, one finds that appraisers holding the more difficult to obtain certifications (i.e., Certified Business Appraiser (CBA) from the Institute of Business Appraisers or the Accredited Senior Appraiser (ASA) in business valuation from the American Society of Appraisers) generally do high quality work and are well regarded in court.
Our PeopleSeveral TVB Brokers and VPSG affiliates are members of, and/or accredited by
professional valuation organizations such as the Institute of Business
Appraisers (IBA),
Types of Valuation ReportsTHe Vet Broker offers a variety of valuation reports and formats. For information on standard services for Buyers & Sellers follow the appropriate link below: In addition, we can provide valuations for different needs. Contact us to discuss your need today.
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