When a potential buyer considers a specific dental practice, the buyer wants to know what his / her annual income potential might be, if the buyer reproduces the seller’s level of production and collection.
YOUR TAX RETURNS ARE NOT ENOUGH
Most sellers realize that they will need to give potential buyers copies of at least 3 years of their practices’ tax returns. However, tax returns only show buyers the sellers’ taxable income. They do not show buyers what their income potential might be after the sale. Buyers may have some expenses that the sellers didn’t have. Buyers may not have some of the expenses that sellers show on their tax returns. Some of the buyers’ expenses may be more or less than those incurred by sellers.
(If you haven’t read Part 1 of this article – click here to read it first.)
Valuing Receivables: What Must Be Considered?