Who Should Perform Your Practice Appraisal?

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.).

What is An Orthodontic Practice Valuation?

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.

Dental Practice Management Firm Shares Tips on Finding the Right Partner

The most important decision for many orthodontists after buying an orthodontic practice is finding a partner to share the workload in a growing business. Bentson Clark & Copple specialize in dental practice management, and are experts in matching orthodontists for the best fit when entering a practice.

Doctors from across the United States approach the firm when they have an orthodontic practice for sale. The American Association of Orthodontists can also provide seekers with a wide range of practice opportunities.

Shannon Patterson, Director of Practice Opportunities at Bentson Clark & Copple, oversees the orthodontic resident and selling doctor matching database, a matching assistance program focused on assisting doctors in finding opportunities based on their geographical location and personal preferences.

Patterson, who gives consultation on buying an orthodontic practice, now advises that there are four main factors to remember when looking for a future partner.

1. Have your office undergo a practice valuation
Generally it is ill advised for orthodontists seeking a future equity interest to join a practice that does not have a comprehensive practice valuation. A written practice valuation allows for complete transparency of the financial and operational health of the business. It also gives selling orthodontists a specific idea of what their practice is worth. Make sure the practice is financially ready to take on a partner and has a plan for adding another doctor.

2. Get the word out
Contact orthodontic training programs or individuals in the military to help determine if any interest exists for your practice. Try every possible approach to identifying potential associates/buyers, which may include advertising in industry journals. Bentson Clark & Copple also maintains a well-developed database of orthodontic residents, military personnel, and practicing orthodontists interested in relocating and purchasing a practice. Consider registering for the AAO Practice Opportunities JobBank, a fully automated, secure website that is ideal for doctors who are seeking to add a partner or transition a practice.

3. Personal visit
Once the selection pool has been vetted to a couple of qualified doctors, meet with the candidates one-on-one. Invite the potential orthodontist(s) to visit the practice. If you are comfortable with allowing your staff to be involved in the process, include them. If not, simply plan to meet with them and their spouse outside office hours over dinner and then visit the practice.

4. Consider all the details
Be willing to invest enough in the importance of this transaction to seek the advice of knowledgeable legal and financial professionals that specialize in practice transition. Do not have a potential associate/partner enter your practice merely on a handshake. Become as knowledgeable with the transition process as possible.

Remembering these tips will ensure a good doctor/ practice relationship has been formed and new doctors will merge seamlessly into the practice with the staff. Following these guidelines will ensure doctors help their practice by finding the best candidate that will continue to make the practice profitable and successful.

Call today to learn more about orthodontic practice sales or to receive a free 30-minute consultation.

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