A New Era of Practice Valuation

2022 brings us to a new era of practice valuation. A number of factors come in to play. First, it is becoming more and more evident that the final evaluation is based on the EBITDA of the practice. It is of utmost importance to make this number as high as possible. Make sure that all personal expenses are easily identifiable to justify an addback. Second, the size of the practice will influence the multiple to create its final value as well as the location and growth factors. Multi-doctor practices with higher EBITDA will create a higher multiple while banks will only loan 85-100% of one year’s gross to an individual buyer. You should plan your exit strategy at least 3-5 years in advance. This is necessary in order to review your financials for areas of improvement and make the necessary changes that will positively impact your bottom line and year over year practice growth.

Be sure to reach out to your TPSG representative in your area to be sure that your EBITDA is where you need it to be to “Maximize your Practice Value”.

Dr. Dave Davenport
Great Plains and Mountain Region

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