At some point in your career you either joined or purchased a practice, and chances are a practice appraisal was done. So if you’re thinking, “I’m not bringing on an associate, or expanding or selling my practice; this doesn’t apply to me,” think again.
There are other highly important reasons to have a current practice valuation. Your associates, staff, patients, and most importantly family, depend on the success and continuity of your practice. It represents one of, if not the most, important assets you own. You need to protect it and your loved ones in the process.
All practice owners need to have a Letter of Instructions that spells out in detail what needs to be done in the case of an emergency and who the key contacts are (e.g., accountant, attorney). That way the practice can continue to run, your employees can work, and your patients can be cared for even in dire circumstances.
If you are a sole practitioner, it is especially important that you have a current practice valuation. In the case of a disability or the untimely death of the practice owner, approximately 30% of practices will sell within 90 days. After that timeframe, the chances of a practice selling at any price decrease dramatically. If a practice value hasn’t already been established, the likelihood of selling quickly is significantly reduced. By having a current practice valuation, the doctor’s family will be able to sell the practice and benefit from the doctor’s hard work.
That same practice valuation is also available for the many other reasons normally associated with practice valuations. If you purchase equipment, expand your practice, or take on an associate, you will need a practice valuation for financing, and to determine any future buy-in arrangements for the associate. While the practice valuation may not be current at the time you go to the bank or are ready for an associate, depending on the appraiser, you may be able to have the valuation updated rather than getting a completely new valuation. There are many reasons to get a practice valuation; buying and selling a practice is just two of them. Protecting your family and legacy may be the best.
Originally posted in Sidekick Magazine
About the Author: Hillary Waxman is the Director of Marketing for Henry Schein Financial Services. She has more than 20 years of experience as a strategic marketing and communications professional with Business-to-Business and Business-to-Consumer companies across a broad range of industries. Ms. Waxman has an MBA from the Wharton School of Business of the University of Pennsylvania and received her Bachelor of Science degree from Cornell University.
Henry Schein Professional Practice Transitions can be reached at 800-988-5674 or firstname.lastname@example.org. This is neither legal nor accounting advice.