Finance and valuation
Practice valuation
Practice valuation is an estimate of what a dental practice is worth, prepared for a sale, purchase, buy-in, financing or other purpose using accepted valuation methods.
The ADA says beginning with an accurate valuation sets the stage for effective negotiations and prevents the misunderstandings that often kill deals. It lists scenarios that call for a valuation, such as buying or selling, and notes that a valuation gives a purchaser numbers to use in deciding whether to buy and how to get financing. The IRS says appraisers should consider all three generally accepted approaches, the asset-based, market and income approaches, and use professional judgment to pick among them. Value depends on purpose and method, so two valuations can differ. A formal practice appraisal is done by a qualified appraiser. Owners should ask an attorney and a CPA about tax and legal effects.