How do appraisals and valuations differ?
A valuation provides a more complete picture of market value than a simple appraisal. This is because an appraisal takes into account only tangible assets like equipment and buildings while a valuation includes the tangible assets as well as intangible assets such as operating systems, patient records and physician's reputation.

Why do I need a valuation?
As a buyer, the most important reason is to verify the "True Net" (net cash flow to the owner.) This will confirm if the practice can provide both a reasonable salary and enough cash flow to pay off a practice loan. Additionally, if a loan is needed, the lending institution will usually require documentation of market value. As a seller, you want to know what your practice is worth and to document a history of strong profitability.

Why should Circumference be my valuation consultant?
Professional practices are more complex to value than ordinary businesses for three reasons. First, a significant amount of the practice value is derived from the reputation and abilities of the physician. Second, multiple factors separating one practice value from another include location, patient loyalty, referrals, facilities and the physician's work habits. Third, special problems are posed by dependency on one or a few key individuals and their contributions are an important factor in determining the value. Circumference knows what to review while understanding each practice has its own nuances.

Circumference's professionals focus on the valuation of medical, chiropractic, dental, podiatric and allied health care practices. Our specialty is valuing practices earning between $50,000 and $5,000,000. Our extensive experience in health care paired with expertise in practice finance and valuations gives us the advantage you need.

Are you paying too much?
Doctors selling a practice often have an over inflated value of what their business is worth. The old "Rule of Thumb" simply isn't the most accurate approach (See "The Problems with the Rule of Thumb" article on our Resources page.) Using a professionally prepared valuation can help prevent costly mistakes. Whether buying or selling a practice, it is key to know if the intangible assets are over or under valued.

Why should I get help?
Time and accuracy. Numerous factors influence practice value. What financial information should a seller deliver? What financial information is most important to a buyer? How does the practice compare to the industry? Do the facts show the income potential justifies the purchase price? You could spend hundreds of hours doing research just to figure out the relevance of the data, what to look for and what to ignore.

What will I get if Circumference performs a Practice Valuation for me?
Our clients receive a professionally prepared document that provides a detailed analysis of the practice. The report will also explain our methodology and show the calculations we used to arrive at the range of value. Accountants, lawyers and bankers appreciate the detail and supporting documentation we provide.

How long does it take to get a Practice Valuation?
Circumference works jointly with our clients to collect the necessary information. Once the information is collected, the process proceeds quickly. The Buyers Pro Forma Income Statement and the Practice Estimate Report will take two to three weeks to complete. The Practice Valuation Report and The Value Enhancement Report are more extensive and will take about six weeks to complete. If there are delays in obtaining information from the practice owner, then the process takes longer. Progress reports allow clients to know the status of the valuation at any given time.

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