Valuing Professional Practices: A Practitioner’s Guide
(CPE Course)

by Robert F. Reilly and Robert P. Schweihs

Published by CCH Incorporated in 1997

This CPE course covers the basic theory and practical applications of valuing professional practices, such as medical and dental practices, law practices, and accounting practices. The three approaches to value (income, market, and asset-based) are discussed in detail. Also discussed are data gathering, discounts and premiums, and report preparation. A quiz is provided at the end of the course which can be submitted to the publisher for 8 hours of CPE credit. Published by CCH Incorporated (currently out of print).

Table of Contents

Part I—Planning the Professional Practice Valuation

Purpose of the Appraisal

Objective of the Appraisal

Data Gathering and Due Diligence

Professional Practice Comparative Information

Sources of Professional Practice Industry Financial Data

Selecting a Valuation Approach

Part II—Professional Practice Valuation Approaches

Introduction to the Income Approach

Introduction to the Market Approach

Introduction to the Asset-Based Approach

The Excess Earnings Method

Part III—Fractional Ownership Interests and the Estimated Value

Reasons to Appraise a Fractional Ownership Interest

Approaches to the Valuation of Fractional Ownership Interests

Fractional Ownership Interest Valuation Discounts and Premiums

Discount for Lack of Control

Discount for Lack of Marketability

Discounts and Premiums for Other Nonsystematic Risk Factors

Sequencing of Discounts and Premiums

The Reconciliation Process

The Review Process

Relationship of the Review Phase to the Valuation Process

Reconciliation Criteria

Final Value Estimate

Valuation Conclusion

Presentation of Valuation Conclusion

Summary

Part IV—Reporting the Professional Practice Valuation Results

Introduction to Valuation Reporting Standards

Appraisal Reporting Standards

Elements of the Appraisal

Retention of Appraisal Reports and Files

USPAP Confidentiality Provisions

Summary

Conclusion

Appendix A            Bibliography

Appendix B            Uniform Standards of Professional Appraisal Practice Table of Contents

Appendix C           Business Valuation Standards of the American Society of Appraisers

Appendix D           Business Valuation Standards of the Institute of Business Appraisers

Appendix E            Business Valuation Standards of the National Association of Certified Valuation Analysts

Appendix F            Revenue Ruling 59-60

Appendix G           Revenue Ruling 68-609