Do you own a private practice? Would you like to sell it someday to transition into retirement or another business opportunity? If yes, you need a broker’s opinion of value performed by a qualified business broker, or valuation expert.
An opinion of value is an integral part of selling a private practice. It helps you determine your business’ worth, and what it could sell for in today’s market. Read on to discover how an opinion of value works, and why you need one.
Understanding How an Opinion of Value Works
To value a business, the broker or valuation expert will run an adjusted cashflow analysis to formulate your business’ SDE (seller’s discretionary earnings) and EBITDA (earnings before interest, taxes, depreciation, and amortization). Additionally, the broker will conduct a market analysis including gathering comparative data to see what similar businesses have sold for over the past several months. The multiples shown in the comparative data will then be applied to the SDE, EBITDA, and gross revenues to formulate the broker’s opinion of value.
Why Do You Need an Opinion of Value?
According to Score, a business mentorship platform, most business owners don't know how much their private practices are worth. As a result, business owners often omit intangible assets and undervalue their businesses when listing their business for sale.
Even if you aren't planning to sell your practice, an opinion of value will help you make informed business decisions. An opinion of value offers the following benefits:
Understand the Business Position
A broker’s opinion of value helps you know your business’ position relative to the market or industry. For instance, the opinion of value will reveal the market prices of similar ventures. You'll therefore understand how to price your business in relation to its competitors.
Gain Financial Insights
An opinion of value reveals deep financial insights that business records may not portray. For instance, on a balance sheet, you likely have an estimated value of your business assets. However, an opinion of value transcends the assumed value and gives you the real value of the business.
Make Quicker Decisions
Business decisions such as business financing, sales, and mergers require critical analysis before implementation. The downside, however, is that decision-making may be more complicated without a ready opinion of value. Having an accurate business valuation at your fingertips helps you make quicker decisions and maximize arising opportunities.
How to Get an Opinion of Value from Private Practice Transitions?
Private Practice Transitions offers professional business consulting and brokerage services. We work with owners of professional service companies across many industries including financial, legal, physical therapy, veterinary medicine, and many others.
Getting an opinion of value from Private Practice Transitions is easy! Simply complete the Get Started form on our website indicating that you’d like an opinion of value. We will then provide you with detailed next steps including the questionnaire you need to complete, as well as the list of due diligence items (tax returns, financial statements, etc.) we’ll need to prepare the valuation.
If you are planning to sell your private practice, the first step is determining the business’ value, and that's where a certified business broker comes in. An opinion of value from a broker will reveal the actual business value, help you understand the business position, and gain financial insights before listing your practice for sale. Contact us today!