Chris Frederiksen, CEO & Chairman 2020 Group USA

transcript

When You are Looking to Sell Your Practice or Buy a Practice, What you

Should Know About Valuations, Financing and Payout Options.

Chris Frederiksen, CEO & Chairman2020 Group USA

Announcing our 2013 Seminar Program– Register Today at www.2020groupUSA.com

The most frequent questions I get are:

•What’s the Multiple?•What’s the Multiple?•What’s the Multiple?

PCPS Survey

Sole Practitioner• 65% are over 55

PCPS Survey

Multi-Partner Firms• 63% expect a partner exit within 5 years

The Multiple is not the cause of a practice’s value – it’s the effect of the 15 C’s

C C c C c C C c C c C C c C c

The 15 C’s

1.Client Retention2.Culture of the Firms3.Chemistry of the People

The 15 C’s

4.Care standards for Clients5.Comparable Relationship6.Co-dependency with Clients

The 15 C’s

7.Capacity to serve the Clients8.Charging, Billing and

collecting of fees9.Close enough office location

The 15 C’s

10.Cost Savings11.Cash at Closing12.Contingency Payout

The 15 C’s

13.Compensation for services rendered

14.Cutting back15. Communicating the deal

to Clients

10 Key Considerations of Valuation

1. Location2. Size3. Types of Practice4. Dependency5. Staff

10 Key Considerations of Valuation

6. Recurring Revenue

7. Billing Rates and Realization

8. Concentration of Fees

9. Age of Clients

10.Technology

21 Key Deal Points

1. Price Determination

2. Cash Down payment

3. Payout Period

4. Acceleration

5. Contingency

6. Collars

7. Tax Treatment

21 Key Deal Points8. Financing9. People and Benefits10.Use of Name11.Advising Clients12.Fees 13.Deficient Work (Fix-it)14.Uncompleted Work (Catch-up)

21 Key Deal Points15.Consultancy16. “Perks”17. Tail Insurance18. Non-Compete19. Disputes20. Death21. Divorce

So what’s the REAL deal on Multiples?

•Major City•Suburbs•Rural

Final Piece of Advice

• Do NOT sign a lease for office space!

Chris Frederiksen, CEO & Chairman 2020 Group USA

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