Chapter 10 CALCULATING PRACTICE VALUE IN A …

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Business, Legal and Tax Planning For the Dental PRACTICE CALCULATING PRACTICE VALUE in a Changing Market Second Edition (Revised 05/06/2001) f:\wppbooks\bus-legl-2ed\chap-10-doc (2001) Ch. 10 Pg. 1 Chapter 10 CALCULATING PRACTICE VALUE IN A CHANGING MARKET The valuation methods reviewed herein include: (i) summation of assets; (ii) capitalization of earnings; (iii) capitalization of excess earnings; (iv) multiple or percentage of gross revenues; (v) values of similar practices ; and (vi) discounted future earnings. The valuations herein contemplate a complete sale and purchase, although partial sale and acquisitions are usually based upon a prorata percentage of the PRACTICE acquired. For example, if the doctor acquires a 50% interest, the purchase price of 100% of the PRACTICE is multiplied by 50%. Summation of Assets Under the asset approach, the fair market VALUE of the asset categories are determined.

Business, Legal and Tax Planning For the Dental Practice Calculating Practice Value in a Changing Market Second Edition (Revised 05/06/2001) f:\wppbooks\bus-legl-2ed\chap-10-doc (2001) Ch. 10 Pg. 3 As a result, the in-place value of the equipment in a well designed facility will be greater than in

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