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Articles

The Professional Advisory

  1. Is it Time to Move?
  2. Staging A Dental Practice
  3. The High Cost of Dying
  4. Deal-Busters
  5. Patients - Attract and Retain
  6. Should I Stay or Should I Go?
  7. Is There a Buyer for Every Practice?
  8. Good, Better, Best - The Market has Spoken
  9. Smooth-Sale-ing
  10. Buying Time
  11. Patients, Patience, Patients
  12. A Real Patient
  13. Why Do a Practice Valuation? I'm not Selling
  14. Irrational Exuberance or The New Normal?
  15. Do dental equipment and dental technology affect a practice value?
  16. Finding and Being a Mentor
  17. Bigger is Better
  18. Daves Top Ten List for Buyers (Vendors should read this too!)
  19. How Well Do You Know Your Practice?
  20. Dave
  21. What will happen to dental practice Values in the next 10 years?
  22. Your Premises Lease is an Important Asset
  23. What are Associates Thinking?
  24. There is Life Outside the GTA
  25. When Is the Right Time to Sell My Dental Practice?
  26. Mergers are a Viable Option
  27. Is Your Associate an Asset or a Liability?
  28. Has your Practice Facility Kept Up With Your Billings?
  29. The 100 per cent of Gross Myth
  30. The Past, The Present and The Future
  31. Caveat Emptor
  32. Overpaid Long Term Staff
  33. Selling your Practice in Stages
  34. A Potential Pitfall of Selling Shares
  35. Value in Your Practice Through Balance
  36. Only Trusted Staff Can Defraud You
  37. To Own or Not to Own Practice Real Estate? That is the Question.
  38. Coping With A Large Patient Base
  39. Successful Dental Practice Transitions
  40. Taking Care of Business
  41. The Investing Dentist Phenomenon
  42. Two areas to focus upon that could negatively impact the value of your practice
  43. Organize your Debt in Order to Sell your Practice
  44. Having a Better Team
  45. How Do I Prepare My Practice For Sale
  46. How Do I Prepare My Practice For Sale? Part 3
  47. How Do I Prepare My Practice For Sale? Part 2
  48. How Do I Prepare My Practice For Sale? Part 1
  49. Advice to My Son or Daughter Graduating from Dental School
  50. Transition - What to Expect
  51. Discussion on Digital X-Rays
  52. Partnerships and Shotguns
  53. Strategic Planning - How to Get Started
  54. Calling All Vendors - Practices have Gone Up in Value
  55. Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
  56. Matrimonial Practice Valuations
  57. Purchaser's Guide to Affording a Practice
  58. Location Improvements Throughout Your Career
  59. Small Practice Valuations
  60. Partnerships – The Best and The Worst
  61. Changing Location When the Opportunity Comes Along
  62. Visual Presentation of Your Practice
  63. Presentation of Charts
  64. Your Premises Lease Can Be Your Worst Enemy
  65. How to Select an Appraiser for Your Practice
  66. How Are Your Billing Ratios?
  67. It Pays to Invest in Your Tangible Assets
  68. The Importance of Separate Financial Statements
  69. Five Time Frame Levels to Sell a Practice
  70. 12 Suggestions to Safeguard Computer Data
  71. How to Buy a Visible Practice
  72. Why is there a shortage of good practices today?
  73. The Importance of Equipment in the Purchase of a Practice
  74. The Balanced Practice
  75. Will My Practice Be Saleable in The Future?
  76. Buyer Be Aware
  77. Excess Profit - The Second Key
  78. Patients and Profits are the Keys
  79. Plan Ahead

Volume 12: The Importance of Separate Financial Statements

Download the PDF version now!

Too often I come across a dentist with two or more locations and there is only one set of financial statements for all the practices. This will give rise to many problems when the dentist wishes to sell only one of the practices. The purchaser and his or her accountant place a high value on their ability to see separate financial statements for the practice which they are interested in purchasing.

If a purchaser is purchasing one of the practices owned by the vendor and there is only one financial statement for all locations, ( it is none of the purchaser’s business what the other practices are doing,) the vendor would be hesitant to show any financial statements and this leaves the purchaser somewhat skeptical. It certainly does not make it easier to sell the practice.

It is not an expensive request to have the accountant prepare a separate financial statement for each location as well as an overall set of financial statements for income tax purposes. Separate financial statements also permits you to review each location as to its productivity.

We recently represented a nice practice for sale which was a satellite practice without separate financial statements and a number of the banks did not want to fund the sale because there were no separate financial statements. The doctor only had one joint financial statement and we had to create a reasonable financial statement given the billings, rent and staff costs. This is a last resort.

Separate financial statements require the bookkeeper to keep a separate ledger for each practice as much as possible. I realize that supplies can be transported between practices but this is easy to account for. There is a strong belief that financial statements are true and accurate when they are prepared by an accountant but the reality is that they are no better than the information supplied by the dentist. The accountant’s statement indicates that there was no audit done although often times the accountant’s statement indicates that a review engagement was completed which indicates that the statements were reviewed by the accountant with the dentist in an attempt to identify any potential errors.

Any unusual transactions were discussed to ensure that reasonable steps were taken to avoid any misrepresentation. A review engagement gives the reader a greater level of assurance that the statements are correct but there is no guarantee.

Well presented financial statements with reasonable groupings to reflect the activities of the practice can be a valuable tool in the sale of the practice.

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