In our tenth episode we take a look at an article that was published on how practice values are calculated. We learn that gross revenue alone is not what makes a practice high value, but rather profitability in addition to desirability/risk.

When we do our valuation we look for the "true profit" of the practice which requires a lot of subtraction from the gross revenue reported on the tax return. Once we have the true profit of the practice we then can determine the "capitalization rate" which is the return a buyer can reasonably expect from the practice going down the road.