Anytime the decision to purchase or sell a professional practice is made, it is necessary to know what the practice is worth. An active, ongoing practice is a very valuable asset and “how valuable” needs to be defined by carefully appraising all the factors involved.
For many appraisal situations, it is often necessary and appropriate to retain an independent, outside appraiser. This brings to the appraisal the benefits of professional experience, training and third-party objectivity. Most business valuations are arrived at as a “going concern value”, that is, the value of the entity assuming that the practice will continue to operate without any significant interruptions. A valuation conducted by a professional appraiser provides both Seller and Buyer with an informed opinion of value.
The appraiser should be someone who is knowledgeable about, and familiar with, the location of the practice and should also have experience with comparable practices in the area. It is also noteworthy to mention that many factors are involved in the selling or buying of a practice and it is important to review your situation carefully while seeking the advice of an accountant or consultant familiar with dental practices before reaching any final decisions. Once an educated decision about whether to sell (or buy) has been made and you have selected a competent appraiser to work with, you can begin the actual valuation process.
Valuations generally take six to eight weeks to complete. Carroll & Company’s typical protocol would begin with a meeting to establish your needs. Once a commitment to work together has been made, Carroll & Company will issue an engagement letter with our established fees. Our initial correspondence will also include an extensive list of information necessary to complete the valuation. After this information is provided, Carroll & Company will conduct an interview with the Owner/Doctor during our on-site visit to the practice. Following the interview and on-site visit, the information/data is analyzed and an opinion of value is reached. We then issue an extensive report documenting and supporting the value.
Our report can be a very powerful and helpful tool to both Seller and Buyer. In today’s market most practice purchases are financed (often 100%) and the lending institutions will utilize a professionally prepared appraisal to support their decision to fund.