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Practice Valuations

Discussion in 'Practice Management' started by Maximum S, Apr 9, 2018.

  1. Maximum S

    Maximum S Welcome New Poster


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    Hello,


    I am helping a friend who is looking to buy his first practice.
    I work in Mergers & Acquisitions, however, I cannot find a secure model for how this has taken place in the past for Podiatry clinics. I'm after a bit of advice from anyone who has been involved in the purchase or sale of a Podiatry practice, any help would be appreciated.

    Typically how a business in any industry is valued is dependent on a multiple of a variable, most typically a multiple of 'EBITDA' (Earnings before Interest, Taxes, depreciation and amortisation), an accounting measure of what most would consider as the actual profit of a business. There are a range of multiples that can be used in any industry, i.e. in podiatry perhaps Revenue or a multiple of patients at the practice (This is sometime undertaken in dentistry). As most Podiatry/Chiropody practices are typically fairly small (1-4 practitioners), I would expect the EBITDA multiple to be lower than for large a business, due to the increased exposure (& likely impact) of any given variable throughout the business, and importance of the founder/owner.
    From looking at small UK practices currently advertised for sale, the multiples, typically I'm seeing:
    Net profit multiples: 1.5x - 4x
    Revenue multiples: 0.4x - 1x

    So my question is; has anyone sold their practice, know of any calculations they would use to value their practice should they come to sell it, or know who they would ask these questions to?


    Many thanks
     
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