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The Valuation Process / Frequently Asked Questions |
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The Valuation Process
The valuation process is concerned, primarily, with an assessment of a justifiable value for goodwill, which is the intangible recognition of both practice performance and a potentially realisable premium in the open market. Such an assessment is based mainly on the application of return on investment criteria to historic trading performance, trends and profitability. Many other features are also taken into account such as the value of fixtures fittings and equipment, the practice location(s), presentation, patient profile, local trading conditions, competition and so on.
Freehold and leasehold property valuation is not included as this would normally be assessed by a local commercial estate agent with a good knowledge of the area and therefore site visits by RA Valuation Services Limited are not normally required. Stock, usually a secondary issue, is normally valued by the principals at the time of business transfer. Uniquely, a substantial database of earlier practice valuations developed by RA Valuation Services Limited over recent years enable each new valuation to be bench-marked against earlier results, ensuring that market trends are observed and greater accuracy achieved. |
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Frequently Asked Questions
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What do I get with my valuation? |
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The results of our valuation process in a professionally prepared and bound report. The report itself is detailed and informative, professionally presented and smartly bound. It gives details of the scope of business activities, staff, premises, catchment demographics and competition, financial information and fixtures, fittings and equipment. |
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Can’t you just give me a “ball-park” figure? |
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There is no such thing. Each valuation performed has an individual assessment and a detailed analysis of recent trading accounts and other data relating to the practice, its staff, its location, its customers, local market conditions and so on. Any other approach would be unacceptable to bank managers, lawyers and accountants. Not only that, it could result in you not achieving the full and fair market value for the practice if you sell it. |
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Isn’t goodwill based on annual turnover? |
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Absolutely not. Turnover is often the least important financial criterion. Goodwill valuation is dependent upon many things. The most important of these is profit but we also reconstitute the trading profits to arrive at a true trading picture and review gross profit margins, trading trends, the business environment. Most importantly, we ascertain what prices have been successful in “winning” sales of other similarly sized practices in the local market. This is where our unique database of information derived from actual business sales and selling prices comes into play. |
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What information do I need? |
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Certified or audited Accounts for the last three years followed by details of the location of the practice, fixtures, fittings and equipment, records of patient numbers and cost per examinations... But don’t worry, our questionnaires explain everything and are simple to complete. |
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What if my practice has several outlets or branches? |
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Many of our valuations are for multiple outlets. In these cases you must let us know if you need one valuation for the whole practice or a separate valuation for each branch. In the latter case, we need separate trading accounts for each outlet. Apart from that, it’s the same process. |
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Can you help me sell my optical practice? |
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Most purchasers, their advisers and providers of funding require or insist upon an independent business valuation such as the RA Valuation Services’ model. Having had your valuation, however, you should then talk to a specialist selling agent for optical practices such as Myers la Roche, another service provider to the AOP. |
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How long will a valuation take? |
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The valuation process normally takes three to four weeks from our receiving accounts and all the information we need although a we also offer a popular low cost upgrade “fast track” service – completing a report within seven to ten working days. |
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Registered in England No: 2262718
Registered Office: Elizabeth House, Unit 13 Fordingbridge Business Park,
Ashford Road, Fordingbridge, Hampshire SP6 1BZ
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© RA Valuation Services Ltd 2007
Website and its contents copyright RA Valuation Services Ltd |
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