At some point in the life of your orthodontic career, there will most likely come a time to have your practice valued. This process usually occurs only once for most practitioners, but more in some cases. The reasons for having an orthodontic practice valued vary, but by far the most likely reason is the contemplation of a change in ownership. If you plan to retire and sell your practice, a practice valuation is highly suggested as one of the first steps in the process. When the time arises, do you know who should perform your orthodontic practice appraisal?
The AAO provides its members with a list of companies or individuals that offer valuation/evaluation services to the orthodontic community. If the purpose of the valuation is for an ownership change, it is strongly suggested you select a firm that specializes in orthodontic valuation and transition services rather than using your local CPA or accounting firm. Bentson Clark & Copple, LLC, provides valuation services and appears on the AAO’s listing, as do several other well-respected companies.
Most Certified Public Accountants who have been involved in the sale of various businesses can likewise prepare some type of valuation report for your practice. For reliability purposes, the report should follow accepted valuation methodology. It should be completed and signed by someone who holds nationally recognized valuation credentials (such as CVA, AVA, ASA, etc.).
Bentson Clark & Copple specializes in orthodontic valuations and transitions, but what does this really mean and involve? We are in the business of helping orthodontists during the pivotal points within their careers. We perform practice valuations, provide partner location services, offer practice sales and marketing services and help negotiate practice transactions.
Let’s focus on practice valuation. You are more than likely aware of the concept of business valuation, but may question how orthodontic practice valuations work. When an orthodontist is ready to find out what their practice is worth, they come to us. We then provide them with an information request document. This multiple page form requests the doctor’s personal information, and general information about the practice, including, the staff, hours of operation, leasing arrangements, number of locations and referral sources, among other items. After this information is collected, we then accumulate statistical and operational information. We inquire about the practice’s fees, the number of start cases and case completions, contracts receivable balance, number of active and recall patients and information on all active patients with paid in full balances.
Besides the on-site practice visit, perhaps the most important part of the valuation is collecting the practices’ financial information. We ask doctors to provide the past three years’ profit and loss statements and the most current interim profit and loss statement. We also obtain the most recent tax year-end and month-end balance sheets and a fixed assets listing. Lastly, doctors need to submit tax returns for the past three years including any other supporting statements. (Generally, we find that practices that employ practice consultants have a good grasp on key operational metrics and systems compared to practices that do not use practice consultants.)
We take all this information and determine a fair market value of a practice through a valuation report. The report briefly explains the various general valuation approaches and the valuation approach used by Bentson Clark & Copple. Through a variety of charts, graphs and statements, we explain how the value is calculated. The report includes a practitioner biography, the practice history, state and local demographics and an industry profile.
For more information regarding orthodontic practice valuations, please contact our office.
GREENSBORO, NORTH CAROLINA – Orthodontic valuation and practice transition services company Bentson Clark & Copple, LLC recently released their 7th annual orthodontic practice valuation review in their quarterly newsletter, the Bentson Clark reSource.
The review analyzes data from 25 orthodontic practice valuations performed in 2011. The data includes net collections, practice income, overhead rate, practice value and number of locations for each respective practice. The data analyzed was completed in accordance with the National Association of Certified Valuators and Analysts’ Professional Standards, says Laura Overcash, Director of Marketing. This annual review of practice valuations can be used as a benchmarking tool for current orthodontic practice owners in regards to practice overhead, fair market value and current net collections. The analysis notes that many other factors must be recognized and considered to provide a complete understanding of the value of orthodontic practices for sale. The orthodontics practice valuation review compares the average single office practice values to multi-location practice values. As in previous reviews, a material variance in collections between single-office and multi-location practices exists.
Overhead rates for all practices analyzed ranged from 35.5 percent to 67.1 percent of collections. The overhead rates analyzed in the review do not include any doctor-related compensation or non-practice related expenses such as perquisites to the doctor owner.
More trends and interesting findings were available mid-February to subscribers of the first quarter issue of Bentson Clark reSource for $95 a year. To subscribe, visit bentsonclark.com/reSource.cfm or call 1-800-621-4664.
Learn More To learn more about buying or selling an orthodontic practice, subscribe to the Bentson Clark resource newsletter, an orthodontic newsletter or to schedule a free 30 minute consultation visit www.bentsonclark.com or call (800) 621- 4664.
Bentson Clark & Copple is committed to providing orthodontists with the tools needed to run a successful business, from the first day of practice until the last day. As an orthodontics transition services company their services include practice valuation, partner location services, and transition negotiations.
© 2012 Master Google and Bentson Clark & Copple, LLC. Authorization to post is granted, with the stipulation that Bentson Clark & Copple, LLC and Master Google, an Internet business marketing company, are credited as sole source. Linking to other sites from this document is strictly prohibited, with the exception of herein imbedded links.