Practice Valuation Process

 

Whether you are preparing to sell your practice, evaluating a purchase, or considering a partner buy-in or buy-out, Vision One Credit Union will work with you to understand your goals and identify the appropriate valuation service.

Our objective is to provide more than an estimated value. We want you to understand what supports that value, the assumptions behind our analysis, and how the findings relate to your plans. The services, required documentation, fees, and anticipated completion schedule will be agreed upon before the engagement begins.

 Step 1: We Begin by Understanding Your Goals

Our process starts with communication about your role in the transaction, the practice, its location and ownership structure, and your anticipated timing.

For buyers, we will discuss the questions you need answered before making a commitment, such as whether an asking price is supported, how the practice performs financially, or what information is missing from the seller’s presentation.

For sellers and current owners, we will discuss whether you are preparing to enter the market, reviewing an offer, planning for retirement, or exploring an internal ownership transition. This conversation also gives you an opportunity to ask about our experience, qualifications, and approach to the assignment.

Step 2: We Provide the Supporting Information Requirements

 We will provide the Practice Profile Questionnaire and Practice Debt Schedule and request the following information. Complete, well-organized records help us evaluate the practice and identify matters requiring clarification.

Information Requested	What To Provide
Practice Profile Questionnaire	Complete the form provided by the Credit Union.
Current Practice Debt Schedule	Complete the form provided by the Credit Union.
Federal Income Tax Returns	Provide the practice’s 2023, 2024, and 2025 Federal Tax Returns, including all schedules and statements.
Year-End Profit and Loss Statements	Provide the practice’s year-end Profit & Loss Statements for 2023, 2024, and 2025.
Year-To-Date Financial Statements	Provide  a current practice Profit and Loss Statement and a corresponding Balance Sheet.
Owner Discretionary Expenses	Provide an itemized list of expenses paid by the practice on the owner’s behalf.

 NOTE: Examples of owner discretionary expenses include owner-related insurance and retirement contributions, wages paid to family members who do not actively work in the practice or whose roles would not require replacement after a sale, automobile expenses, and travel unrelated to practice operations. Additional information may be required on a case-by-case basis.

 Step 3: We Define the Assignment and Confirm the Engagement

 After reviewing the initial financial information and supporting documentation, we will help you select the appropriate service and confirm the assignment in an Engagement Letter.

The letter will identify the practice or ownership interest being valued, the effective valuation date, the purpose of the assignment, and who may rely on the report. It will also establish the applicable standard of value, such as fair market value, and clarify the assets and obligations included in the analysis.

We will discuss whether your need calls for a detailed valuation report, a summary report, a review of an existing appraisal, or a separate financing-focused analysis.

Descriptions of our available valuation reports are provided on the Business Appraisals page of the Vision One website.

 Step 4: We Learn How the Practice Operates

 We will communicate regarding the business behind the financial statements, including the owner’s clinical and management responsibilities, associate involvement, staffing, services, patient activity, equipment, and premises.

Our review considers optometry-specific factors such as doctor production, reliance on the current owner, optical performance, payer mix, staff stability, and lease continuity. Please explain significant developments, including an associate’s departure, a relocation, changes in operating hours, or a major equipment purchase, and when they occurred relative to the valuation date.

 Step 5: We Analyze Financial Performance and Supported Adjustments

We will review the practice’s financial performance, owner compensation, normalized earnings, and cash flow. We will explain proposed adjustments and the information supporting them. An expense is not automatically added back to earnings simply because an owner identifies it as discretionary.

When reviewing owner compensation, we will consider the expense associated with the clinical and management work the practice continues to require. This helps distinguish an adjustment to the current owner’s compensation from eliminating the cost of work that still needs to be performed.

We may ask you and your accountant to explain material differences between tax returns and financial statements. Our objective is to understand the practice’s financial results not to select the presentation that produces the highest earnings.

 Step 6: We Develop and Explain the Estimated Value

 We will select appropriate valuation methods using professional judgment. The principal approaches are income, market, and asset-based approaches. Industry rules of thumb may be used as reasonableness checks, but not as a stand-alone valuation method.

We will explain why the selected methods are appropriate, and which assumptions have the greatest influence on the result. We will also clarify whether the value represents the operating business, the owners’ equity, or a specific ownership interest, and how cash, debt, inventory, and other assets or obligations have been treated.

Before comparing our valuation with an asking price, we will help you confirm that both refer to the same ownership interest and the same included assets and obligations.

 Step 7: We Deliver the Report and Review the Findings with You

 Once the analysis is complete, we will prepare the agreed-upon report and review the findings with you. Our discussion will address the estimated value, financial adjustments, selected methods, significant assumptions, and limitations not simply the final number.

We will clarify what information was independently checked and what was accepted as provided. A practice valuation engagement should not be understood to include an audit of the practice’s financial statements.

We will work with you to identify factual errors or missing information and provide supporting records so we can determine whether corrections are warranted. The review is intended to clarify and support the analysis, not to produce a preferred value.

 Step 8: We Explain the Difference Between Value, Price, and Financing

 We will help you distinguish between three related but separate questions:

• Appraised value: What does the valuation support, given its scope, assumptions, and effective date?
• Negotiated purchase price: What price and transaction terms will the buyer and seller accept, including the assets transferred, payment structure, and transition commitments?
• Financing capacity: What financing can the buyer obtain and repay? A valuation does not establish an approved loan amount. Financing requires a separate underwriting assessment of repayment ability, financial information, collateral, and other applicable risks.

For buyers, these distinctions help frame the purchase decision and post-closing operating budget. For sellers, they help place an offer in the context of the complete transaction rather than the headline price alone.

 Step 9: We Help You Consider the Next Steps

 We will discuss how the findings relate to your stated goals. For buyers, next steps may include additional due diligence, revising an offer, pursuing financing, or deciding not to proceed. For sellers, they may include establishing an asking-price strategy, addressing weaknesses identified in the analysis, organizing records, or refining the transition plan.

Continue working with your attorney and accountant on the transaction itself, including the applicable contracts, leases, financial records, and purchase documents. Before relying on an older valuation for a new transaction, contact us to discuss whether changes in performance, ownership, or circumstances warrant an update.

Getting Started

 Contact Vision One Credit Union with a brief description of the practice, the ownership interest involved, your goals, and your anticipated timing. We will discuss the appropriate service and the information needed to begin.

Valuation services are subject to engagement acceptance, the agreed scope of work, and receipt of the required information.

Our goal is to help you understand the value not simply receive a number so you can make an informed decision about your next step.

Contact Information 

For any questions regarding the practice valuation process or to request a valuation please contact:

Ken Ferreira

President & CEO

Certified Practice Appraiser

Office: 916-369-3269

Email: kferreira@visionone.org