Every practice owner will get at least one valuation for their practice in their course of ownership. As industry professionals, we are advocates of this happening not only at the time of contemplation of sale, but at any inflection point in one’s career where a plan of the future is being revisited. That can mean financial planning, relationship planning, career planning, or an assessment for clarity. Too often we think we need a reason to value a practice. Also, a valuation is WAY LESS FUN than doing almost anything else in life. BUT it might be the first step in giving you the freedom to do more of the things you do love.
As a Certified Exit Planning Advisor (the only dentist in Canada with that designation, which I recognize is an odd hat to wear but I wear it proudly!), I believe wholeheartedly that EXIT PLANNING IS GOOD BUSINESS STRATEGY.
Owning a business of value means you understand value. You understand what is easily transferable and what isn’t. You understand what the risks are in the business you own. You understand if you’ll be selling a business or a job to your successor. And you’ve chosen (key word here) what you want to change in your practice that will affect your value because it aligns with what you want and your professional philosophy.
Often owners believe value is fixed by the marketplace. But the most valuable practices we see have been strategically positioned to be the most valuable, usually over the course of years of planning with advisory teams that understand the owner’s vision.
When it comes time that you decide to attain a practice appraisal, ask the following questions to your prospective appraiser before you make that choice:
- Are they bank approved?
- Will buyers and lenders understand the rationale that is used to justify value?
- How are the projections established? Are these generalized in nature or specific to your practice?
- Who owns it? Some valuators and brokerages will not allow you to release your own valuation to other parties for marketing your own practice sale (even though you paid for it).
- Is value influenced by who pays for the valuation? (If so, can we really call this a “valuation”?)
- Is the valuator focused on establishing an accurate value or are they more concerned with getting you to list your practice with them?
- What’s the turnaround time?
- Will you be supported with a strategy session if desired on what you could do to improve the value stated once complete?
These 8 questions are questions you deserve answers to before you sign with your chosen appraiser. Just like dentists, there are many appraisers to choose from. Below are our answers to those questions. If you’re at an inflection point in your career, we want you to be as informed as possible. Reach out today and we’d be pleased to hear about what you want your future to look like.
