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    Relying on outdated dental practice valuations

    When to find out the value of your dental practice—and when to sell.

     

    The right time to transition

    In a scenario where a reliable practice valuation has been obtained, it is important to sell when there is a legitimate offer in order to achieve the worth of years of effort. There is no real set time limit, but a valuation that is outdated may create questions and a request for more current financial data. That is not a good thing because of the time, effort, and cost expended to obtain more information.

    For the dentist who is slowing down, this definitely will reduce the price since the gross and net revenues will most assuredly fall when contrasted to the valuation information. For a younger dentist who wishes to sell, it is possible to put in additional effort to enhance the value of the practice compared to the valuation. If that is the situation, it is probable that the original valuation’s cost and time frame was rushed since more positive results appeared after the valuation date. In a situation such as this, the dentist should wait for the best financial data before retaining an expert to prepare the valuation.

    An older valuation’s effect

    The longer a seller waits before transitioning his or her practice and the lower the results of the operations that a buyer sees after the valuation date, the less the seller should expect to receive. The argument can also be made that if the results of the practice efforts produce better gross and net incomes, the more a seller can use those amounts after the valuation date to produce a higher value. No one knows what the result will be after the valuation has been prepared.

    Using a professional

    Working with a professional practice evaluator with credentials such as CPA, CVA, or other such designation, and revealing the best face of the practice results will allow the best price in the quickest time frame. It doesn’t pay to have the valuation prepared until the right time. When that occurs, arrange with a good practice broker who has nationwide contacts or marketing ability to have as many dentists looking at the practice as possible. 

    Bruce Bryen, CPA, CVA
    Bruce Bryen is a certified public accountant with over 40 years of experience and is a part of RKG Tax & Business Services LLP, an ...

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