Your Practice’s Free Valuation Could Come At A Hefty Price

Dental Practice Valuations

It has become a popular business model for some companies to contact prospective or existing business clients to offer them a free business valuation report. But what the sales rep won’t tell you is just how expensive these free services can be. In the end, you are just throwing your hard-earned money down the drain.

Owning a dental practice is just as mentally taxing as maintaining any other economically viable business. It’s no wonder you often daydream about innovative ways to cut office expenses and jot down ideas to generate revenue on napkins over dinner. At some point you will come to terms with the fact that, in addition to helping people, your ultimate business goal is to increase your practice’s overall value while making sure you can save enough for your own retirement.

What would you do if someone approached you about conducting a free business valuation on your dental practice? The easy answer is to say “yes,” right? After all, you are probably well aware of how important a business valuation is to the success of your practice – not to mention your own financial future. So, naturally, it doesn’t make sense to turn down this free offer … or does it?

Read Also: What To Expect From Your Career In Dentistry

Is ‘Free’ Worth It?

It has become a popular business model for some companies to contact prospective or existing business clients to offer them a free business valuation report. But what the sales rep won’t tell you is just how expensive these free services can be.

I recently met with an insurance representative who mentioned that he provides clients with free business valuations. This particular company had CPAs and valuation professionals on staff and would prepare these valuations with just the answers they collected from a five-minute questionnaire and three years’ worth of their financial data. Within a few days, their client would (supposedly) have a clear picture of what their business was worth.

After hearing about their method, I had even more questions. After all, having conducted thousands of business valuations myself, I knew something didn’t quite add up. So I asked to have a look at the valuation report this company typically presented to their clients and, within minutes of reviewing the document, the company’s motive became crystal clear.

Not only was this sales rep giving clients inaccurate information, he was grooming them to purchase more insurance than they actually needed. A transaction that would have resulted in you paying much more than you could have anticipated. On the other hand, when you work with a business valuation expert your practice actually stands to make significant gains.

When you hire a business valuation expert, you are hiring a professional who will take the time and energy to really get to know you, your dental practice and its prospects for the future.

Not Free, But Priceless

Email the Bright Dental Team to find out how our business valuation experts can help you grow and better manage your dental practice. The benefits of a Know & Grow Valuation include general business planning, succession planning and financial planning, buy-sell agreement values, exit planning strategies, and more.

By Tim McDaniel, CPA/ABV, ASA, CBA (Dublin office)


Related Articles

Are You Backing Up Your Data?
Ten Tips For Growing Your Dental Practice
Grow Your Dental Practice By Adding A Specialty

Estate Tax Increases Could Decay Your Future Plans

Estate Tax IncreasesJust like you warn your patients about tooth decay, my job as an accountant is to warn you and inform you about potential decay that could impact your personal finances. Back in April, the Obama administration announced its proposed 2014 fiscal budget, and there were a few surprises in the proposal. According to the budget proposal, there’s a possibility that estate tax levels could return to what they were in 2009 by the year 2018. So what does this mean?

  • The exemption could be reduced from $5.25 million (today’s inflation indexed level) to $3.5 million (a non-inflation indexed level).
  • The top estate tax could move from 40 percent (the current level) to a maximum of 45 percent.

What Do Potential Estate Tax Increases Mean To You and Your Dental Practice? 

Now that there’s the possibility the exemption level could decrease—pretty dramatically, I might add—you are at risk for hitting these levels pretty quickly. Your “estate” is not just the value of your dental practice. It is also the value of your building (if you own your building) and other assets you own. And when you add the value of all of those items together, you’re probably close if not past the $3.5 million mark. And after you pass the $3.5 million mark, you could be paying hefty taxes on anything beyond that. So how can you prepare for these increases without feeling the effects?

  1. If you haven’t done so, start to put together a succession plan now. Do you have a business exit strategy? If not, it would be good for you to start developing one.
  2. Consider giving pieces of taxable estate, including your building, to your children. This could help lower the value of your estate.

Dental Practice Valuation Help 

If you are unsure of what your practice is worth, there’s no time better than now to get a handle on it. With the potential for these tax increases, it’s critical that you know and understand what your practice is worth, and what you can do to minimize any tax implications. If you’re at a point where you don’t know your estate value, contact Rea & Associates. Our team of adept and talented Dental CPAs can help you determine what your practice is worth and help you avoid any potential tax pitfalls.

Related Articles

Tax Planning – Not A Once-A-Year Event

What To Consider When Purchasing A Dental Practice