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Consulting and Valuation are both part art and part science, but there is always a risk that some of the art may be lost or not understood. One of the more routine engagements an advisor or valuation analyst may encounter is to consult on or value a practice for a buyout, whether it be due to planning for retirements, death or disability, or a buy-in. Such an engagement can be significantly more complex than appears on the surface. Some of the nuances include:
- Definition of “fair market value” and whether any lack of control or marketability discounts are to be considered.
- Determining replacement compensation versus “profits” to be included in the valuation model.
- Assessing local market rates of compensation relevant to a practice located in that market.
- Evaluating whether and to what extent private equity “market” data is relevant.
- Reconciling actual working capital to normal working capital.
Key takeaways for attendees:
- How the terms of a shareholders’ agreement or operating agreement impact the level of value.
- How the local market of the practice determines the appropriate normalization adjustments – just because it plays in Peoria does not mean it will play in Manhattan.
- Why physician “Market” transactions reflect specific terms from the buyer that are rarely applicable a given valuation engagement, but may influence perceived risk and the discount rate.
- What elements to consider in reconciling actual and normal working capital – and what is “normal” anyway?
- Using a Fair Market Value balance sheet to “prove” the Equity value.
Mark Dietrich
Mark O. Dietrich
CPA
[email protected]
(508) 877-1999
Mark O. Dietrich is a summa cum laude, Beta Gamma Sigma graduate of Boston University, where he also earned an MBA with high honors. He holds a Master in Taxation degree from Bentley College as well.
A prolific writer, Mark is Editor and Contributing Author to the Business Valuation Resources/American Health Lawyers’ Association Guide to Healthcare Finance and Valuation 4th Edition, Editor and Principal Author of Business Valuation Resources Guide to Physician Practice Valuation 3rd Edition; and co-editor and contributing author to the Business Valuation Resources/ American Health Lawyers’ Association Guide to Valuing Physician Compensation and Healthcare Service Arrangements 2nd Edition and co-author with Gregory Anderson, CPA/ABV, of The Financial Professional’s Guide to Healthcare Reform. Mark is also the author of the Medical Practice Valuation Guidebook and co-author of Thomsen-PPC’s Guide to Healthcare Consulting along with more than 100 articles on valuation, taxation, managed care, and the healthcare regulatory environment.
Mark’s career experience includes serving as partner-in-charge of the annual audit of an 80-physician tax-exempt faculty group practice affiliated with a major teaching hospital, representation of tax-exempt and taxable entities in Internal Revenue Service field audits, participation in the development of a 250-physician network and negotiation of managed care and Medicare Advantage contracts, and more than 450 valuation and litigation support engagements in the healthcare industry. Mark has an in-depth knowledge of the healthcare payment and regulatory environment, including such arcane matters as physician billing codes and the impact of local market provider payment rates on fair market value compensation.
A regular speaker at state and national conferences on healthcare reform, valuation, and other topics, Mark also lectured in the United Kingdom in 2009, 2011, 2012, and 2014 on Managed Care, Healthcare Valuation, and on Valuation of Medical Practices to Her Majesty’s Revenue and Customs. He served as Chairperson of the American Institute of CPA’s (AICPA) National Healthcare Industry Conference for 2012 and 2013, chaired the AICPA Virtual Conference on the Affordable Care Act in January 2014 and the National Healthcare Industry Conference Affordable Care Act section in 2014. AICPA acknowledged his career achievements at the 2016 National Healthcare Industry Conference.
About Our Presenter
Mark Dietrich is one of the appraisal profession’s most prolific and accomplished authors (with four books published in 2012 and one each in 2016 and 2017) and lecturers. If you are interested in purchasing one of his books, visit the Publications page. Specific categories of services can be found by visiting our Services page. Mark is also available as a widely recognized and accomplished speaker on the impact of the COVID-19 Pandemic, healthcare valuation, healthcare Reform and buy-sell agreements.
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