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What is your Practice Worth?
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Of course the question has crossed your mind, "If you were to sell your practice today how much would it bring?" Understandably, that's not a simple question in today's dynamic market. Every practice is unique. Pricing your practice is a tricky matter. If you ask too much, buyers will look elsewhere. Yet, if your price is too low, you'll cheat yourself out of thousands of dollars.
Don't be burned by outdated pricing rules!Using any one formula or rule to determine practice value is a setting you up for a potentially costly mistake. There are numerous factors that influence practice value: equipment, goodwill, profitability, financial history, staffing, buyer debt service, etc. The old rule of thumb "a practice is worth one year's gross" simply isn't true any more. Where does your practice stand? If real estate is involved then you have to determine if the practice income can support the fair market value of the real estate. Will you have to delay retirement another 5-10 years?
Can you see the forest for the trees?Sometimes a person is so close to something it is difficult to form an objective opinion. Medical practices are no exception. Unless you have had exposure to numerous practice financials, sales data, and industry financing trends, it is unlikely a person will be able to determine a fair market value in today's practice marketplace. You might have to spend hundreds of hours doing research just to figure out what factors will make a significance difference to buyers and their lenders. Did you adjust the sales price to compensate for the doctor's spouse working part-time for free? Did you adjust to normalize for the amount of vacation and hours worked? Are the practice financials sufficiently documented to attract a buyer? Do you know if the practice income after debt service will support the value of the real estate? Do you know what "add backs" can be used in your situation to maximize the sales price? How much will a buyer pay for "potential"? Does this practice warrant a top dollar price, or only a middle of the road price, or something less? Can a buyer get financing to buy your practice?
Pick the valuation service you needWe offer a range of valuation services to allow you to choose the most cost effective solution tailored to your needs and budget. The difference between these services is related to the time involved, the extent of the investigation into the business and report detail.
Hourly Consulting Sometimes our standard services don't fit your situation. Then consider our hourly consulting services at $250/hour. 2nd Opinion Service The 2nd Opinion Service ($1,950) is for someone that wants an economical “ballpark” practice value. This report reflects the appraiser’s limited opinion as to practice value. It is considered a preliminary report under the Standards of the Institute of Business Appraisers, by which the analysis and investigation is intentionally limited as a cost and time saving measure. This service includes a 5-10 page written opinion of what the practice would likely sell for on today's market, and a description of selected practice characteristics and where the practice is over performing or under performing. We use the last 2-3 years of business financial data and information from proprietary questionnaire, and two valuation approaches to determine Fair Market Value. The 2nd Opinion Service is ideal for
Practice Opinion Letter The Practice Opinion Letter ($3,675) is for someone that wants a more detailed analysis and conclusion, but desires to reduce the cost of valuation by using a short-form report. This 30-35 page report uses the last 5 years of business data and information from a proprietary questionnaire, and uses three valuation approaches (Market, Income, and Asset Approaches) to determine value. The normal standard of value used is Fair Market Value, but may be requested for other standards of value that might be appropriate for divorce, oppressed shareholder, or strategic investor purposes. Additionally, upon request we provide (1) a 20+ page demographics report, and (2) a due diligence checklist outlining important steps needed as part of a practice sale, and (3) a list of common mistakes in buying/selling a practice and how to avoid them. The Practice Opinion Letter is ideal for
Comprehensive Practice Value The Comprehensive Practice Value
($5,000 - $ 9,000) is for someone that wants a long-form report with detail
sufficient to permit the reader to reasonably replicate the appraiser's
procedures. This 80 – 120 page report is based on essentially the same
analysis as that used in the Practice Opinion Letter, but the report fully
documents the analysis and intermediate steps,
Valuation Critique
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