The Professional Advisory
- Is it Time to Move?
- Staging A Dental Practice
- The High Cost of Dying
- Patients - Attract and Retain
- Should I Stay or Should I Go?
- Is There a Buyer for Every Practice?
- Good, Better, Best - The Market has Spoken
- Buying Time
- Patients, Patience, Patients
- A Real Patient
- Why Do a Practice Valuation? I'm not Selling
- Irrational Exuberance or The New Normal?
- Do dental equipment and dental technology affect a practice value?
- Finding and Being a Mentor
- Bigger is Better
- Dave's Top Ten List for Buyers (Vendors should read this too!)
- How Well Do You Know Your Practice?
- Dave's Top Ten List for Vendors
- What will happen to dental practice Values in the next 10 years?
- Your Premises Lease is an Important Asset
- What are Associates Thinking?
- There is Life Outside the GTA
- When Is the Right Time to Sell My Dental Practice?
- Mergers are a Viable Option
- Is Your Associate an Asset or a Liability?
- Has your Practice Facility Kept Up With Your Billings?
- The 100 per cent of Gross Myth
- The Past, The Present and The Future
- Caveat Emptor
- Overpaid Long Term Staff
- Selling your Practice in Stages
- A Potential Pitfall of Selling Shares
- Value in Your Practice Through Balance
- Only Trusted Staff Can Defraud You
- To Own or Not to Own Practice Real Estate? That is the Question.
- Coping With A Large Patient Base
- Successful Dental Practice Transitions
- Taking Care of Business
- The Investing Dentist Phenomenon
- Two areas to focus upon that could negatively impact the value of your practice
- Organize your Debt in Order to Sell your Practice
- Having a Better Team
- How Do I Prepare My Practice For Sale
- How Do I Prepare My Practice For Sale? Part 3
- How Do I Prepare My Practice For Sale? Part 2
- How Do I Prepare My Practice For Sale? Part 1
- Advice to My Son or Daughter Graduating from Dental School
- Transition - What to Expect
- Discussion on Digital X-Rays
- Partnerships and Shotguns
- Strategic Planning - How to Get Started
- Calling All Vendors - Practices have Gone Up in Value
- Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
- Matrimonial Practice Valuations
- Purchaser's Guide to Affording a Practice
- Location Improvements Throughout Your Career
- Small Practice Valuations
- Partnerships – The Best and The Worst
- Changing Location When the Opportunity Comes Along
- Visual Presentation of Your Practice
- Presentation of Charts
- Your Premises Lease Can Be Your Worst Enemy
- How to Select an Appraiser for Your Practice
- How Are Your Billing Ratios?
- It Pays to Invest in Your Tangible Assets
- The Importance of Separate Financial Statements
- Five Time Frame Levels to Sell a Practice
- 12 Suggestions to Safeguard Computer Data
- How to Buy a Visible Practice
- Why is there a shortage of good practices today?
- The Importance of Equipment in the Purchase of a Practice
- The Balanced Practice
- Will My Practice Be Saleable in The Future?
- Buyer Be Aware
- Excess Profit - The Second Key
- Patients and Profits are the Keys
- Plan Ahead
Volume 12: The Importance of Separate Financial Statements
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.