An Appraisal is an Opinion of Fair Market Value

Before the selection of your Appraiser, it is important to understand that anyone can set themselves out as a dental practice Appraiser. Any qualifications and professional designations acquired are entirely voluntary. A licence or approval from a licensing body is not required to appraise a dental practice.

While a license is required to act as a Broker this license does not necessarily mean that the individual is qualified to appraise. Many individuals and companies claim to be appraisers. While this is legal, be certain to ascertain the individual’s credentials and experience first. The value and worth of an Appraisal or Valuation is directly related to the Appraisers’ qualifications, thoroughness and accuracy of their work.

The key to an opinion of fair market value should be based upon knowledge of actual historical arms length sales for comparative analysis and the supportive rationale.

Benefits of an Appraisal
  • Many hours are required to identify, document and value the various goodwill factors and to accurately record the details (i.e. manufacturer, values, serial number, age, condition and colour) of all major assets.
  • The Appraisal of a professional practice is an extremely intricate process requiring specialized training and specific experience. Without this skill and knowledge, it would be a very frustrating exercise, not to mention the likelihood of an inappropriate result.
  • Appraisal fees are 100% tax deductible; therefore, if you estimated your loss of income due to hours spent by yourself trying to obtain information and compared this to the after tax costs of having an Appraiser provide the report, you are much further ahead to engage a Professional Appraiser.
  • The Appraisal document is the foundation of factual presentation for numerous financial and legal issues.  The Appraiser’s professional accreditations and standards, with absolutely no conflict of interest, will assure the client of quality work and complete confidentiality.
Purposes of an Appraisal
  • To determine fair market value and to assist in determining an asking price.
  • To provide qualified third parties with financial and legal information (Matrimonial or Pre-Nuptial).
  • To obtain an accountant’s opinion.
  • To assist in obtaining financing – loans or leases.
  • To determine tax allocations and classification of assets.
  • To prepare legal documents, offers, conditions, bills of sale, etc.
  • To permit registration and documentation of instruments for collateral for loans, leases and mortgages.
  • To assist the courts in legal disputes for awarding values.
Contents of an Appraisal
  • Complete detailed description of the practice, type of treatment, patients, fees, systems and personnel.
  • Location of facility, plans, premise lease, options, renewals, restrictions and area demographics.
  • Practice and management company financial statements, expenses, analysis and cash flow.
  • Record of all assets, leasehold improvements, clinical equipment and administrative furniture, instruments and materials, liabilities and accounts receivable.
  • Details of all major assets, including approximate age, condition, manufacturer, model and serial number with market and replacement costs.
  • Goodwill calculations and market comparisons with supporting rationale.
Seven Suggestions for Uses of Your Practice Appraisal:
  1. Review the appraisal with your accountant or other practice advisors to identify any opportunities for improvement or change.
  2. Your ROI Corporation Associate can meet with you or your advisors to explain our methodology and to assist you to prepare a Critical Path (call for a sample).
  3. Your appraisal has our opinion of the full replacement cost of your practice leaseholds and equipment.  You may wish to review your office contents insurance to be certain you are adequately (or perhaps overly) insured.
  4. Please note the “minus” adjustments found on the calculation of the goodwill page.  These are the “negative” aspects of your practice as purchasers see it.  Some of these items can be changed to increase the value of your practice at little or no cost.  Call your ROI Corporation Associate to discuss these further.
  5. Put a copy with your valuable documents when steps 1, 2, 3 and 4 are complete.

    Click here: Letter of Direction

    to receive a document that will help in the event of your sudden death or disability.

  6. To increase your practice income, your  ROI Corporation Associate is familiar with companies and individuals that teach fundamental techniques to help you to achieve this goal.  Please call us to discuss the possibilities.
  7. We maintain a list of Accountants, Lawyers, Bankers, Insurance Professionals and Practice Management Consultants who can help you with the next phase of your dental career, whatever it may be.  Please call if you require any names.

All information provided and any discussions you have with your ROI Corporation Associate are strictly confidential.

Qualifications of ROI Corporation’s Appraisers
  • Education: Accreditation or Diploma in Business Administration; knowledge of accounting, Canadian Economics, finance, Employment Standards Act, marketing and property law.
  • No conflict of interest. Highly professional and ethical standards.
  • Possess historical records of practice sales and market comparisons.
  • Credibility as expert witness for court and legal disputes on values.
  • Experience with proven record within the appraisal field for professional practices.
  • Work devoted to the appraisal and valuation field.