The shaky economy could force potential buyers to take a more sober view of practices on the market, he says. One common pitfall is for buyers to become overly optimistic about a practice's potential earnings growth. "They should be looking not at its historical performance, but its ability to generate capital on a sustained basis going forward," Tibergien says, adding some client attrition always follows the sale of a practice. "Some buyers fall into a trap where they look at how a book has grown in revenue the past five years and just extrapolate that going forward."
What's Your Practice Worth?
May 1, 2001
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Firms Should Act Now to Maximize ValueFirms should act now to improve their processes and management oversight with an eye on increasing their valuation down the road. Buyers will appreciate a firm that has taken then time and effort to organize their practice around efficient processes and will pay more than they will for a firm that needs to be cleaned up.Mark Tibergien, who is quoted in this article, also gave an excellent presentation at the MMI conference with some very effective advice for hot to improve the value of an advisory firm. You can read my blog posts about it here: [url]http://wp.me/pPor1-cs[/url]