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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 & Chairman 2020 Group USA
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?
3
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PCPS Survey
Sole Practitioner• 65% are over 55
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PCPS Survey
Multi-Partner Firms• 63% expect a partner exit within 5 years
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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
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The 15 C’s
1.Client Retention2.Culture of the Firms3.Chemistry of the People
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The 15 C’s
4.Care standards for Clients5.Comparable Relationship6.Co-dependency with Clients
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The 15 C’s
7.Capacity to serve the Clients8.Charging, Billing and
collecting of fees9.Close enough office location
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The 15 C’s
10.Cost Savings11.Cash at Closing12.Contingency Payout
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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
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10 Key Considerations of Valuation
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6. Recurring Revenue
7. Billing Rates and Realization
8. Concentration of Fees
9. Age of Clients
10.Technology
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21 Key Deal Points
1. Price Determination
2. Cash Down payment
3. Payout Period
4. Acceleration
5. Contingency
6. Collars
7. Tax Treatment
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21 Key Deal Points8. Financing9. People and Benefits10.Use of Name11.Advising Clients12.Fees 13.Deficient Work (Fix-it)14.Uncompleted Work (Catch-up)
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21 Key Deal Points15.Consultancy16. “Perks”17. Tail Insurance18. Non-Compete19. Disputes20. Death21. Divorce
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So what’s the REAL deal on Multiples?
•Major City•Suburbs•Rural
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Final Piece of Advice
• Do NOT sign a lease for office space!
