If you are contemplating going through the process of obtaining a valuation of your professional practice, you should be prepared to deal with the production of information concerning your practice. The following is a list of some of that information. It is imperative, however, that every practice, every transaction and every valuation be dealt with as a unique exercise which may require additional and important information and disclosure.
1. A copy of financial statements of the practice for the last three years together with a copy of the front page of your income tax return confirming your professional fees.
2. Details concerning your gross billings since your last year end.
3. Are your gross billings all a direct result of patient billings? If not, what percentage of the gross billings is attributed to billings generated by associates? Details of any portion of gross income that is related to income from associates or the sale of vitamins, orthotics, back rests etc. and the amounts of each?
4. A copy of the present lease for the premises in which the practice is being maintained.
5. If there is a corporation involved in the operation of the practice?
a. Is there an agreement between the corporation and yourself?
b. Provide a copy of the financial statements of the corporation for the previous 3 years.
6. Can your practice be defined as being “straight, mixer, activator, etc., etc.?
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7. Do you have any specialty designations, ie. Fellow of Sports Sciences, Radiologist, etc.?.
8. Is there a majority of patients who require acute or maintenance care?
9. Do you receive referrals from any particular source? If yes, what is the source of the referrals, and would that source of referrals continue after a sale of the practice?
10. A list of the equipment in the office.
11. How many chiropractic support staff are involved in the practice?
12. How many of the staff will remain at the location should a sale of the practice take place?
13. Is your spouse working in the office? If not, did she/he work in the office?
14. What is the name of the practice? Is it registered?
15. Are there any associates in the practice? Have there been any other associates of the practice (chiropractic or otherwise)? How many? Details have to be provided as to when they were involved in the practice and why they left?
What are fees for services established by your office? Initial visit? Subsequent visits? Breakdown between billings, ie. 3rd party insurance, WSIB, patient payments?
Upon receipt of the above information, an opinion as to value should be able to be prepared with respect to the practice. However, there may be further information which might be of assistance in the preparation of the opinion having regard to the peculiarities of the particular practice. For example, should the location of the practice be in a community which is peculiar to a particular segment of the population or is otherwise unique, that issue would have to be taken into account. Examples of such peculiarities might include ethnic or language characteristics or communities which are inundated with or lack practitioners. Each characteristic has some bearing on the attractiveness of the practice. The "bottom line", for the most part, rests with the ability of the purchaser to maintain the "status quo" of the practice, which invariably allows the practitioner to maintain a cash flow to allow for payment of expenses, the return of the purchase price, and receipt of a reasonable profit.
Further Postings
While initial interest in the Blog has been interesting and worthy of continuance. I should let you know what is in the future. It is my intention to post information on the valuation of a practice -- the course notices from teaching for 32 years and issues relevant to any interested party. I have not allowed for comments -- even my time is limited -- but if there are issues to be dealt with -- my email address is all over the Blog.
Postings
For those of you who are sitting patiently by waiting for the next posting -- I have finished a 3.5 hr presentation to the Vocational Rehabilitation Association and doing a presentation at CMCC this weekend. Thereafter, in between writing a chapter for a medical text edited by a faculty member at McGill, I will start posting further articles, etc.
otherwise, shut off the computer and enjoy summer!!!!
allan freedman
otherwise, shut off the computer and enjoy summer!!!!
allan freedman
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