Medical Practice Valuations

Knowing the value of a medical practice or dental practice is essential in many instances including:

• when buying or selling a practice
• admitting a new shareholder
• doing estate planning or retirement planning, and
• for many other purposes

Doctors and dentists know their practice is unique – no other practice exists quite like it.  So it should not surprise you to learn how risky and misleading it is to rely on valuation software, guidelines, formulas, multiples, metrics and ratios.

Why?  Because valuation software, guidelines, formulas, multiples, metrics and ratios assume that (with the exception of the variable being measured such as revenues, book value or EBITDA), every practice is identical to every other practice in that niche.

That assumption is wrong, plain and simple.  You know and we know that a medical practice or dental practice is as unique as its owner’s fingerprints.  No rule of thumb will ever capture your practice’s unique attributes.  That is why rules of thumb are always inaccurate and should never be relied on.

There is simply no substitute for a thoughtful valuation prepared by an experienced valuation professional.  For example, it takes SPARDATA roughly 40 hours of work to prepare an IRS-compliant Revenue Ruling 59-60 valuation of a typical dental practice or medical practice.

That being said, valuation shortcuts exist.  We know it, and you know it.  Likely you have applied some to value your practice.  So rather than ‘fighting the tape’, in this section we present some of the most common guidelines, formulas, multiples, metrics and ratios for your consideration.   Use them at your own risk!  Remember the results they provide are likely to misvalue your practice by (a median error of) 60% or more.

Choose Your Type of Medical Practice

Find specific appraisal and valuation metrics for:

• Optometry Practice Valuation
• Chiropractic Practice Valuation
• Dental Practice Valuation
• Physician Practice Valuation (coming soon)
• Dermatology Practice Valuation (coming soon)

To see how a medical or dental practice is properly valued, click here to see a real valuation.

When you really want to know what your practice is worth, call us at (800) 895-4100, or complete this form. Helping owners understand the value of their practice is what we do. We’d be happy to help, and look forward to speaking with you.

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