There are typically two key situations that may require a dental practice valuation:
1) Are you selling a dental practice?
2) Are you buying a dental practice?
If you are selling a UK dental practice, a valuation will be required so you can market your dental practice at the right value. Even if you have found a buyer without the need to market, or if your associate is interested in taking over your legacy, a valuation is still highly recommended.
The practice valuation is essentially a document for which negotiations between the buyer and seller can commence.
You, as the seller, will obviously be focused on achieving the highest valuation possible for your years of hard work, so you may already be considering a company who can prepare the practice valuation and also market your practice to find a suitable buyer – this is very much standard practice.
Dental & Medical Financial Services have connections in the market to assist with the sale of your dental practice.
If you are buying a UK dental practice, you may be considering a dental practice valuation to get a second opinion on the marketed value of a practice, but by someone acting on your behalf.
Not everyone buying a dental practice does this, as they are usually looking to save money. However, it is strongly advised to consider this exercise.
Three reasons why it is essential to get a practice valuation when buying a dental practice:
1) to justify any financial offer you make to the seller
2) to obtain dental practice finance
3) to support your tax return with HMRC when you include the value of the practice
As a buyer, using the services of a Chartered Tax Adviser or specialist Dental Accountant is recommended, as they not only have insight into how dental businesses operate but also have further knowledge on how HMRC conduct a valuation of a dental practice, so they can ensure that figures have not been overstated for marketing purposes.
The valuation of dental practices are based on a series of calculations, taking into account specific financial and business information, such as:
income levels for the last three or five years
profit levels for the last three or five years
the size and quality of the patient list
any assets that are to be included in the sale
The document itself can be a few pages or more in depth. The important thing is that the correct information has been assessed in a non-bias way using methodical methods and taking into account both commerciality on one hand and regulations on the other.
A dental practice valuation is an important part of the transaction for both selling a dental practice and buying a dental practice. Contact us today to find out more.
As you can see, with a practice valuation, there is often a dual interest. One party will be focused on achieving the highest value possible for the marketing and sale exercise. The other party will be focused on achieving a realistic value for the practice finance application and to support their tax position.
The main thing here is communication and having reliable, professional and specialist dental advisers to help you.