Veterinary Practice Appraisals (Valuations)
How Can a Certified Valuation Analyst (CVA) assist in a veterinary practice transition?
An accurate opinion of value is essential for both the buyer and the seller. If the appraisal is too low that is good for the buyer, but it hurts the seller economically. If the opinion of value is too high the buyer is unlikely to get financed to buy the practice unless the lender does not understand practice values—both veterinarians (the buyer and the seller) suffer as a result.
A quality valuation requires careful and competent analysis.
Some veterinary practices look like they are doing well based upon the tax returns, but there may be underlying issues. For example there might be a star associate that has not signed a non-compete agreement. That dctor could literally walk out the door and take a huge portion of the practice with him or her. Another issue is the practice with antiquated equipment. A new owner may need to invest heavily in new equipment and that affects value.
What are some reasons other than a dental sale for having a valuation.
- Estate Planning. A valuation is just a snapshot in time, but a current valuation is valuable in case the veterinarian passes away.
- Retirement Planning. I hear many doctors say their practice is their retirement, but in most cases it should just be part of the retirement package.
- Divorce. A valuation is critical in a divorce and the standard of value for a divorce appraisal is different than a "Fair Market Value" valuation in many states.
- Partnership Buy-Ins or Buy-Outs. Partnerships can be a big source for litigation and so a competent valuation is essential.
Nate Lynch has achieved the credential of an Accredited Valuation Analyst by the National Association of Certified Valuators and Analysts (NACVA). Nate is a member in good standing in: American Bar Association, New Hampshire Bar Association, Vermont Bar Association, Massachusetts Bar Association, Connecticut Bar Association, Veterinary Medical Law Association, Practice Valuation Study Group, Institute of Business Appraisers, and National Association of Certified Valuators and Analysts(NACVA).