While CoVid 19 has impacted dental practices, many or most have begun the rover process over the last six months. Although your revenue may have declined in 2020, there is no reason to prolong your practice transition. So, what methods are utilized when assessing the value of your practice?
The Net Asset Valuation Method
In this process, your broker or CPA will be looking at certain aspects of your practice. The key elements that stand out during the exercise are most of your tangible assets. On the forefront, this will more likely be real estate. They could also look at the type of technology, equipment, and furniture in use and determine the current market price for each. Intangible assets are also important but can be challenging to assign a dollar amount. Goodwill is a critical part of a practice’s value; however, the dollar value is subjective.
Income-Based Valuation Method
The income-based method determines your practice’s value, and it is perhaps the most accurate compared to the asset and market-based valuation methods. Here, the appraising of your business is in terms of the current cash flow. The valuer also examines the risks of investment.
Based on that, they can then calculate the possible return on investment for the buyer. As you can see, it is an approach that considers capitalized earnings. It may reliably offer that sound solution by establishing the most accurate market value of your business.
While there are different methods to value your practice, it is important to consult your professional experts to guide you in the right direction.