O'Reilly logo

Financial Valuation: Applications and Models, + Website, 3rd Edition by James R. Hitchner

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 20

Valuation Issues in Professional Practices

Professional practice valuation follows the same principles as the valuation of other businesses. Many of the concerns in valuing professional practices are similar to valuing small businesses, such as the likelihood that a practice is highly dependent on a single individual or a few individuals and that it often uses cash-basis accounting. Professional practices are service businesses and usually have few tangible assets. The success of professional practices is dependent on relationships with clients or patients and the reputation of the professionals in the community.

valtip.jpg

Many professional practices obtain most of their patients or clients through referrals, based on the reputation of specific professionals.

Professional practices, especially medical practices, may have contractual relationships with third-party payers. Professionals are required to meet specific educational requirements and most must obtain professional licenses. These characteristics of professional practices influence their valuations.

valtip.jpg

In some jurisdictions, an important issue in valuing professional practices is distinguishing between the goodwill that is solely attributable to the professional (and difficult to transfer) and the goodwill that is attributable ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required