What is your practice worth?
Find out now -- Call today!
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Don't be burned by outdated pricing rules!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?
Sadly, some doctors think their practice is worth much
more than the practice will actually sell for in today's
market. Unfortunately, some have based their retirement
plans on an over inflated value only to discover they cannot
retire as they had planned. This is particularly sad when
health reasons or "burn out" don't allow the doctor the
extra years needed to attain their retirement goal. Even
CPAs sometimes miscalculate medical practice values by as
much as 100% by using IRS formulas that have no basis in
what buyers and lenders will pay for a practice. One might
say, "It probably makes as much sense to hire a
general-purpose CPA to appraise your house as it does a
medical practice, since he/she probably has never marketed
or sold either." Is your CPA is a specialist in medical
practice sales? You need to know!
Sadly, some doctors think their practice is worth much more than the practice will actually sell for in today's market. Unfortunately, some have based their retirement plans on an over inflated value only to discover they cannot retire as they had planned. This is particularly sad when health reasons or "burn out" don't allow the doctor the extra years needed to attain their retirement goal. Even CPAs sometimes miscalculate medical practice values by as much as 100% by using IRS formulas that have no basis in what buyers and lenders will pay for a practice. One might say, "It probably makes as much sense to hire a general-purpose CPA to appraise your house as it does a medical practice, since he/she probably has never marketed or sold either." Is your CPA is a specialist in medical practice sales? You need to know!
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 need
We 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.
2nd Opinion Service
The 2nd Opinion Service ($4,450) 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 12-15 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 at least two valuation approaches to determine Value. The 2nd Opinion Service is ideal for
smaller practices where more expensive solutions are not cost effective
sale to an associate already familiar with the practice
retirement planning or insurance purposes
periodically tracking practice value
for a buyer/seller simply looking for a third party opinion or sanity check and does not require the greater accuracy provided by the other services
for internal planning (e.g., retirement or estate planning) where you just need to keep a pulse on practice value
Practice Opinion Letter
The Practice Opinion Letter ($5,995) 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 at least 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. The Practice Opinion Letter is ideal for
those looking to sell or buy a practice where they are not currently an associate
those who need a more detailed analysis for decision making
those who might want review and input from an advisor or CPA
non-contentious divorce or partnership situations
Comprehensive Practice Value
The Comprehensive Practice Value ($7,000 - $ 12,000) is for someone that wants a long-form report with detail sufficient to permit the reader to reasonably replicate the appraiser's procedures. This 60 – 100 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, and rationale behind decisions. Additionally, this service usually includes a personal site visit and owner/management interview process, whereas the 2nd Opinion Service and Practice Opinion Letter do not include a site visit in the advertised price. For those wanting a Comprehensive Practice Value we prefer to discuss the situation with both you and your attorney/CPA to ensure the report will meet your needs. In general, we prefer not to take engagements where we will be required to testify in court. If you anticipate this need, contact us to discuss our availability and expert witness support fees. The Comprehensive Practice Value is recommended for
purchase/sale of practices exceeding $2M in gross revenue
those needing a valuation for divorce, estate, tax purposes, litigation, partnership dispute
those needing the replicable detail not provided by the other services
We also offer Hourly Consulting for
those when our standard services or reports don’t fit your
situation; or if you don’t require a formal report.
Our hourly consulting rate is $325/hour. Call
for more information about our litigation support and expert
witness on-stand testimony rates. If
you are on a tight budget, want an analysis and informal
verbal or email conclusion, are just looking for help in
identifying 'red flags' in the practice, or have specific
questions that you want answered, the hourly consulting
model is a good fit.
Call for more information about our litigation support and expert witness on-stand testimony rates. If you are on a tight budget, want an analysis and informal verbal or email conclusion, are just looking for help in identifying 'red flags' in the practice, or have specific questions that you want answered, the hourly consulting model is a good fit.
Valuation Critique ($1,995): We will review and critique another written valuation report. Perfect if you have been given a valuation report and want a second opinion. This is not an independent opinion of value, but rather a sanity check on what has been done before. We'll tell you if we find the conclusions and methods cited in the report to be reasonable or off track. Is the valuation credible? Did they review the right information from which to draw their conclusions? Why wonder? Get a second opinion today!
Get your opinion of value today!
Call now. Before it is too late! This is too important for guesses.