Ben Burk, CPA

Kalamazoo, Michigan

What is involved in valuing your business?

·          Marketplace

o         Environment

o         Locality

·          Financial Statements

·          Tax Returns

·          Corporate or Company makeup

·          Corporate or Company policies

Why value your business?

·          To sell

·          For estate planning

·          Divorce case

How to value your business

·          Book value

·          Appraised value of assets

·          Appraised value based upon earnings and growth potential

What to do to be ready to sell

·          Have annual financial statements prepared (preferably by CPA) for 3 to 5 years

·          Accumulate tax returns for 3 to 5 years

·          Re-negotiate contracts

·          Establish referral sources (for company, not just you)

·          Establish working relationships with key employees and contact sources or patients/clients

·          Solidify name of company in community – not just your name

·          Separate company from physical facility

·          Have these important items that purchasers are looking for:

o         Continued referral sources

o         Contracts

o         Position in Community

o         Member of appropriate groups

o         Environment of community growing? Declining?

o         Population trends

o         Structure of company (sole proprietor, partnership, corporation)

o         Type of business (private/individual, nursing care contracts, etc.)

o         Employee contracts, wages, benefits – watch to not set trend in area

Impacts on the sale

·          Managed Care

·          Salary equivalency/balanced budget act

·          Employee compensation

·          Check fringes

·          Competition

o         OTs

o         Doctors – required for valuation

·          Trends

o         Community

o         Your company

·          Tax effects

Types of Sales

·          Stock redemption

·          Stock exchanges

·          Sale of assets

·          Sale of stock

·          Sale and consulting agreement

Summary

·          Why do you want to sell?

·          Put your house in order

·          Be aware of marketplace and your position in it

·          Look at environment

o         Political

o         Local

o         Trends in the community

·          Have records in order and be knowledgeable about them

·          If possible have neutral party value and/or re-negotiate sale