Announcement

TAWC Enterprises llc, formerly Assist to Practice LLC, no longer provides dental practice appraisals or related services. We will, for now and for educational purposes, leave the AP Dental Practice blog available.

For questions related to this blog, please feel free to contact TAWC Enterprises llc at TAWCent@gmail.com.

Regards,

Todd Christensen
CEO

Divorce and Practice Appraisals

I recently corresponded with a potential client who is going through a divorce. Her husband, a dentist, and his attorney were telling her that his two practice's had no monetary value since the dentist did not own the real estate where they were located.


While I understand that divorce is generally a very difficult issue and often ugly, I have to say such a statement is not only unethical and deceitful but also childish and laughable.


Real estate appraisals are separate from practice appraisals. If it is a going business, the value of the practice is based upon its ability to generate a revenue stream for the owner.


But even if the practice had folded, there would still be value in the assets of the practice: equipment, furniture, supplies and sundries. While liquidating assets generally returns only a fraction of their original cost, it does create value.

Yet even if all of the equipment and furniture were leased and there were no supplies and sundries, there would be still value in the patient charts. Such is the case when a dentist passes away. If the estate takes several months to come to a decision on what to do with the practice, there will eventually be a value on the patient charts which a new owner would be willing to pay. It would not be nearly what it is for a going business, but neither would it be insignificant.

Having been so dumbfounded by the doctor's and his lawyer's bald-faced lie, I felt compelled to post a little reality to help with the confusion.

Unbiased Fair Market Value in Face of Pressure

Recently, I had a client going through a divorce that insisted on repeatedly requesting that I provide the absolute lowest Fair Market Value (FMV) in order to minimize the impact on his finances of the pending division of property.

There are several ways for an appraiser to approach such situations, from directly explaining to him or her the importance to appraisers of providing an unbiased product, to stating that you (the appraiser) will provide the "most appropriate" FMV, to simply ignoring the issue.

All clients are different and each will likely benefit from a different technique, but I invite you to share your best experiences in such situations.

Dentist's Practice Appraisal Wants vs. Needs

The two conflicting challenges of doing a dental office appraisal are 1) establishing a "Fair Market Value" and 2) providing the client with a satisfactory sale price.

Generally, a dental practice appraiser is supposed to provide a Fair Market Value, which is, by definition, one that is just and reasonable for all parties involved.

However, each party comes with their own wants and needs with regards to the establishment of a practice value (usually a purchase price). And it is generally the Practice Owner who contracts with and pays the appraiser.

Usually...

• The current owner wants a high value.
• The potential owner wants a low value.
• The divorcing owner wants a low value.
• The estate of the deceased dentist wants a high value.
• The associate wanting to partner in the future wants a low value.

It is, of course, the appraiser's responsibility to understand the various forces pulling him or her in opposing directions, while trying to maintain an independent point of view.

I'd be interested in any comments or experiences sellers or buyers of dental practices have had in regards to whether the Fair Market Value from their appraiser seemed fair or biased.

Best wishes for a happy and safe holiday season!

Todd Christensen

Success@AssistToPractice.com

Dental Practice Appraiser

Personal Budget Busters

In addition to my practice appraisal services, I am a Certificate Personal Finance Counselor® and a financial educator. For many people, hearing the term, "Personal Finance," is tantamount to covering their face with a rag doused in ether. Zzzzzz.

With that acknowledgement, one of my favorite personal finance sub-topics - and one that most participants in my classes actually find interesting and enlightening - is a "Budget Busters" table. It lists several of the little expenses that creep into our day-to-day finances, along with the big sums they add up to on a monthly and yearly basis. I've heard it called "the latté factor" elsewhere.

Here's the link:

http://www.nationalfinancialeducationcenter.org/docs/Budget_Busters_Brochure.pdf

Check it out and see if you have any of your own Busters listed. We've all got something we can work on. It's not necessarily about eliminating them, but rather minimizing their impact and placing them in their proper place among our financial priorities.

Finally, believe it or not, with Halloween over, it's now officially the Holiday season. So with that, I'll end by saying,

Happy Holidays!

Can Your Practice Have Multiple Fair Market Values?

Certainly! The Fair Market Value of a practice can vary wildly, depending up the purpose and use of the valuation. The true value of any practice is only what someone else is willing to pay for it. And "someone else" will judge the practice's value based upon their perceptions. And perceptions are impacted by a great number of circumstances.

Here are just a few:

1. Sale to a potential buyer looking at the practice right now
The buyer sets the true price, though a professional appraisal should provide a practical value range that the seller can use to bolster his or her position. The buyer generally looks at past performance to determine future potential value. However, everything from the color of your equipment to the personalities of your staff members will affect the potential buyer's perceptions of the practice's value.

2. Sale after the death of the owner
With every day that passes after the death of a practice owner, the value of his or her practice decreases sharply. As the news of his or her passing reaches the patient base, uncertainty regarding the practice begins to lead the patients to set appointments with other dentists. Having a practice value established beforehand, and having an emergency transition agreement in place with a professional colleague can minimize the patients' perception of the practice's continuity and provide for an efficient and expeditious transition upon the owner's death.

3. Buy in of a current associate
   Establishing the Fair Market Value of a practice in advance of an associate-to-partner transition can be a complicated equation. On the one hand, the original owner (who naturally wants to maximize the practice value during the transition) perceives that the years of hard work placed into his or her practice includes the potential value the new partner brings into the practice. On the other hand, the potential partner (who naturally wants to minimize the practice value during the transition) perceives that his or her contributions to the practice should be excluded from the practice's current value. It will likely take a skilled and experienced appraiser to help both parties understand where the "Fair" Market Value truly is. It may seem contradictory to say it, but both doctors have valid arguments. The challenge is to reach an agreement perceived by both doctors as "fair," who, after all, want to form a long-term partnership of working together in a positive and constructive relationship.
4. Distribution of Community Property (Divorce)
   In the unique case of divorce, there is generally not an actual buyer for the practice. In such situations, the Fair Market Value is determined by a third-party appraiser and must satisfy the perceived values of the court and all parties. Consequently, the appraisal must be thorough and include reasonable arguments and justifications for the established Fair Market Value.

Getting your practice appraised is an important decision. Make sure that the professional appraiser understands your purposes and the ultimate goals of the valuation.

5 Things EVERY Dentist's Website Should Have

Perusing the Internet, looking at a number of dental practice web sites, it's clear to see why some many doctors still have not invested in one of their own. Certainly, you know a professional colleague who has spent hundreds (though hopefully not thousands) of dollars getting a web site designed and published, only to have it "just sit there," doing nothing for their business.


Having contracted with a professional web designer, the dentist may have a very nice looking home page, with attractive photos and even professional look. But the content can often be meaningless, boring or, worse yet, a turn off to potential and current patients.

While there are other pieces of information and ideas that may be beneficial to have on a Dentist's website, here are 5 things EVERY dentist's website should have easily accessible on or from their home page:

1. A Map with Directions to the Office
   Think like a patient. As with this entire list, consider the most common questions your receptionist answers on the phone. "Where's your office located?" Refer to any landmarks and stores/offices next to your own.
2. Office Hours
   Include the days your open and your normal office hours. As a bonus, look into offering an online scheduling option for potential and current patients to request appointments.
3. Insurance Plans Accepted
   At the end of the list of insurance plans you accept, whether long or short, include an invitation to potential patients with other insurance plans to call your office to discuss their options.
4. New Patient/Health History Forms
   This will only save your patients and your office time if you tell new patients (or email them a link) to visit your website ahead of their visit in order to complete the forms.
5. Dentist AND (more importantly) Staff Bios and Photos
   I'm sure most dentists are aware of the fact that their patients generally have a stronger relationship and more frequent conversations with their staff members than with the doctor. Make sure you have your staff members listed with bios and photos.

Once you have all of these items on your website, market it to your patients. Hang a snapshot of your home page in your waiting room (or place it on the front desk) with the printed question, "Have you visited our web site yet?"

Other great ideas for your website include an office newsletter, frequently asked questions about hygiene and oral health, and perhaps even your office's financial policy.

Doctors who add these five items to their websites and then consistently market it to their patients will find that they actually increase their business's efficiency and will eventually drive new business to the practice.