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Dentists need to smart about paying for divorce and hiring the best available practice valuation expert should be a strong consideration.
When it comes to the growth, state of the art technology and hiring of the best personnel, the owner of the dental practice is typically trying to make his or her office the foremost in the community. The money spent on the enhancement of the practice is almost always at the top of the list for the dentist to prepare the office for the expertise in the professional skill level, layout and comfort for the staff and the patients.
This is to keep aggravation at a minimum and to promote employee morale and patient stability as well as potential referral sources. To other professionals in contact with the dentist, it sometimes appears that he or she is not so diligent in preparing for potential problems on a personal level. One of those areas of non-compliance and lack of preparation is when a divorce is on the horizon and the question of the dental practice valuation arises. The dental CPA or less likely, the attorney that the dentist may know or may be referred to by a colleague, is a source for finding a qualified dental practice evaluator with the skills and experience to go ahead and prepare for the mediator or court date. Of course, it is up to the dentist going through the situation to hire the best available practice valuation expert that he or she can find. Just like the dental office wanting to be the top of the line, it makes sense for the dentist to get the best to assist in protecting those personal assets outside the office but most importantly, the dental practice itself. The practice is arguably the most valuable item that is owned since it probably offers the highest consistent income source plus the most probable growth asset that is available to the dentist.
Finding, interviewing and deciding on the dental practice evaluator:
The first step is to find an experienced dental practice evaluator who will probably be referred by the dental CPA who has had experience with the review of dental practice valuations. Sometimes the dental practice equipment and supply representative has more information about this type of contact than the professional financial people that the dentist knows since that person sees this type of situation much more frequently. He or she also usually has the trust of the dentist since the contact with the equipment and supply representative is on a very frequent basis.
Its important for the dentist to understand that the valuation for a divorce is different than that of a dental practice being ready to be put on the market for a transition. The knowledgeable evaluator understands this and can offer the dental CPA and client the number of divorce valuations that he or she has prepared, the number of times he or she has appeared in the court room and also in what geographic areas of the country the valuations have occurred.Someone who has prepared a few valuations for dentists who are experiencing divorce should not be a good amount to feel comfortable with in a representation that may involve hundreds of thousands of dollars. Like the practice itself, the dentist must think of the adage of “pay me now or pay me later,” in that this evaluator with few experiences is probably much cheaper than the evaluator who has prepared hundreds of valuations for divorce. The more expensive valuation expert typically can present some concepts in the expertise needed as to what he or she knows and how to present that information.
Comparing the cost today for the valuation to the amount that it may cost later because of the lack of knowledge of the evaluator will certainly be a “pay me more later,” approach with additional charges that may be hundreds of thousands of dollars after the settlement of the dispute or opinion from the court. The more expensive dental practice evaluator who has many hundreds of experiences with presenting valuations for dentists going through divorce will most likely be more expensive now but will save thousands and thousands of dollars later. The “later,” is normally when the dentist is getting his or her life back together and overcoming the problems of the divorce to build a new personal life along with a more viable economic look at the practice. This may be when the “later,” really hurts as the practice is just starting to come back to life and concentrating on its resurgence is interrupted by the “on again,” drama of problems from the cheaper, less experienced evaluator’s presentation.
Surviving the divorce and flourishing at the practice after the end of the drama:
What the dentist does not need is a recurrence of effort staving off repeated attempts to draw more funds from the practice to overcome the effects of the less experienced and cheaper evaluator who prepared the dental practice valuation. The long term economic effects of paying off the divorce many times means borrowing enough money to do so as well as the time taken to present information to lenders for the ability to borrow. This has the unfortunate result in casting an aura of lower morale at the office, a somewhat less than cheerful approach to employees and the overall feeling that flows through to the patients as they can understand what is occurring, at least in the atmosphere at the office.
Starting again with the effort to finally finish this problem may take another valuation from an expert who can satisfy the adversarial approach from the former spouse. The ability to move ahead with office plans, possible expansion and other concepts to enhance the dental practice may have to be put on hold until this problem is resolved. Paying for another valuation is such a shame as the entire situation could have been settled with the first valuation. Now the cost of the new one and the time needed to complete the gathering of information to complete it is a severe awakening to understand the difference between the “pay me less now or more later,” adage.
The hope is that the particular dentist involved with this situation has learned and will keep the idea of what expertise costs in mind when it comes to any step ready to be taken at the dental practice. This could be from the potential acquisition of another dental practice, the integration with a DSO or any other area where the dentist does not have the expertise on his or her own to complete the mission without experienced professional help.