Professional Practice Valuations

Professional Practice Valuations

When dealing with professional practice valuations and professional practices, it is important to understand that they come in many types and vary from the standard approaches to valuation.

Different approaches may be used for the following professions:

Legal Practices - Medical Practices

Dental Practices - Veterinary Practices

Pharmacies - Medical Centres

Accountancy Practices - Real Estate Agents

Architectural Practices - Engineering Practices

 

Professional Vs Practice Goodwill

In a professional practice, the value of the intangibles is more likely to constitute most of the overall value than in the case of other businesses and goodwill is more likely to be personal (professional) than in other businesses.

“Professional” goodwill derives from the individual practitioner’s  reputation and personal success in the profession, and the trust and respect that the individual practitioner has engendered in his or her clients.

“Practice” goodwill relates to the firm’s ability to continue to generate earnings without the presence of any particular professional. Location, computer systems, staff, operating procedures, and a recurring client base are all elements of practice goodwill.

 

Which Valuation Method?

The value of a practice will always be based on the specifics of that practice as a business. With that said, the old formulas and multipliers of revenue that were rules of thumb for the value of a practice hold true less and less today than they did 15 or 20 years ago.

Most professional practices share a few key traits that set them apart from other service-oriented businesses. Assessing the practice in light of these traits is important in selecting key valuation inputs.

The valuation methods most commonly used are:

The Market Methos

The Asset Method

The Income Method

The Professional Services Method

With over 30 years experience, you can rest assured that Lee Goldstein will utilise the correct method of valuation for your practice.

Ready to find out more?

Contact us for your Professional Practice Valuation