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How to accurately value a medical practice in a divorce

On Behalf of | Aug 12, 2021 | Family Law |

If you’re going through the divorce process in Washington, a lot can be on the line. With that in mind, one of these things could be the medical practice you’ve worked so hard to build. If this is the case, you might need to know how much this practice is worth. Here’s a closer look at how to value your medical practice for the purposes of property division and support.

Using a multiplier

One of the easiest ways to value a medical practice is to use a multiplier. In the medical industry, most companies can sell for 1.5 to 3 times their annual revenue. With that said, however, the value of your medical practice might not fall within these ranges.

Valuing a practice’s assets

When valuing a business for divorce purposes, the asset-based approach is also commonly used. With this process, you would separate your assets into classes, such as tangible and intangible assets. Once you learn about your company’s revenue with this method, subtracting revenues from your expenses gives you the net income of your business.

Trying the market approach

You can also obtain a decent value for a company by using the market approach. With this approach, you look at what other similar medical practices in your area sold for in the past. After a bit of digging, it should be easy to find at least a few medical practices that were similar to the one you are trying to value.

To summarize, you can choose to obtain the value of your medical practice in several different ways. Having a clear understanding of its value in a divorce can help ensure it’s not unfairly split with your former spouse.