May
24, 200X
Sylvan
Gold, MD
Managing
Member
Multi
Surgical Associates, LLC
Sterling
Road
Anytown,
USA
Dear
Doctor Gold:
In
accordance with your request, I have reviewed the profit-and-loss statements of
Multi Surgical Associates, LLC (Subject Practice) as well as other pertinent
statistical data and information in order to determine the debt-free value of
the ownership interest of its twenty seven members in
the tangible assets and patient records of the aforementioned limited liability
company.
I
have given careful consideration to the industry-specific and practice-specific
factors that affect value and, if the provider agreement by and between Subject
Practice and Surgicare, PA
is for a duration of three years, it is my opinion that, as of December 31, 200X,
the fair market value of the tangible assets and patient records of Subject
Practice is four million six hundred sixty thousand dollars ($4,660,000).
If
said provider agreement is for a duration of five years, it is my opinion that
the fair market value of the aforementioned assets of the subject limited
liability company is six million eight hundred seventy-five thousand dollars
($6,875,000); if said provider agreement is for a duration of seven years, the
fair market value of said assets is eight million two hundred fifty thousand
dollars ($8,250,000); and if said provider agreement is for a duration of ten
years, the fair market value of said assets
is nine million three hundred thousand dollars ($9,300,000).
The
fair market value of the tangible assets and patient records of the subject
does not include the value of the accounts receivable. These assets should be valued
separately.
David
J. Shuffler (Appraiser) assumes the tangible assets and patient records of the
subject medical practice are owned free and clear of all liens and
encumbrances.
I
hereby certify, to the best of my knowledge and belief, that the statements of
fact contained in this report are true and correct, and this report has been
prepared in conformity with the Uniform Standards of Professional Appraisal
Practice of The Appraisal Foundation and the Principles of Appraisal Practice
and Code of Ethics of the American Society of Appraisers.
Sincerely,
David
J. Shuffler
Multi Surgical Associates, LLC
Sterling Road
Anytown, USA
CONTENTS
| PAGE
|
|
| EXECUTIVE SUMMARY | 1
|
| APPRAISAL
|
|
| Revenue Ruling 59‑60 | 4
|
| Standard of Value | 6
|
| Method of Appraisal | 7 |
| PURPOSE OF APPRAISAL | 11
|
| VALUATION
|
|
| Fair Market Value | 12
|
| Break Even Point | 13 |
| FINANCIAL HISTORY | 14 |
| STATEMENT OF QUALIFICATIONS,
LIMITATIONS AND CERTIFICATION |
16
|
Date of Valuation: December 31, 200X.
Standard
of Value: Fair Market
Value.
Purpose
of Valuation:
Appraiser
has
been engaged by Sylvan Gold, MD, Managing Member, Multi
Surgical Associates, LLC to appraise the debt-free value of the
ownership interest of its twenty seven members in the tangible assets and
patient records of the subject practice.
The appraisal is being conducted to determine the fair market value of
the aforementioned assets for the purpose of the development of a specific
strategic management plan.
Description of Subject
Practice:
Multi Surgical
Associates, LLC is a strong, well managed
anesthesiology practice that outperforms comparable practices in the Medical
Group Management Association Cost Survey: 200X Report Based on 200X Data.
Production per full time equivalent
(FTE) physician exceeds the median production per full time equivalent (FTE)
anesthesiologist reported by the MGMA 2003 Survey.
| Multi Surgical Associates* |
MGMA Cost Survey |
|
| Gross Billings per FTE Anesthesiologist | $1,814,889 |
$1,140,229 |
| Total Income Collected per FTE Anesthesiologist | $924,835 |
$541,994
|
| *Fiscal 2003, 4.5 FTE Anesthesiologist. |
Production is on the rise; gross practice income is strong; and EBITDA exceeds comparable practices.
|
$000s) |
12/31/0X |
% |
12/31/0X |
% |
|
Gross Billings |
$6,638,000 |
100.0 |
$8,167,000 |
100.0 |
|
Contractual Disallowances |
$3,430,000 |
51.7 |
$3,830,000 |
46.9 |
|
Total Collected Revenue |
$3,162,850 |
100.0 |
$4,161,757 |
100.0 |
|
Operating Expense |
$451,734 |
14.3 |
$362,768 |
8.7 |
|
Gross Practice Income |
$2,711,116 |
85.7 |
$3,798,989 |
91.3 |
|
EBITDA |
$1,156,244 |
36.6 |
$1,894,652 |
45.5 |
1
The following
table indicates the mix of services rendered:
| Gastroenterology Procedures | 55.3%
|
| Podiatric Surgery Procedures | 8.9% |
| Ophthalmology Procedures | 9.9% |
| Otolaryngology Procedures | 13.8% |
| Orthopaedic Surgery Procedures | 7.6% |
| Plastic and Reconstructive Surgery Procedures | .3%
|
| Urology Procedures | 1.9% |
| Colon and Rectal Surgery Procedures | 2.3% |
The payer
profile of Multi Surgical Associates, LLC is as follows:
| Multi Surgical Associates | MGMA Cost Survey:
Anesthesiology |
|
| Managed Care Organizations | 45.0% |
NA
|
| Medicare | 15.0% |
29.5% |
| Blue Shield | 25.0% |
NA
|
| Indemnity Insurance* | 5.0% |
52.4% |
| Medicaid | 2.0% |
8.0% |
| Workers’ Compensation | NA |
3.0%
|
| *Includes all commercial insurance and self-pay patients. | ||
As of December 31, 200X, accounts receivable were $1,564,000.
The following table compares accounts receivable management of Multi Surgical Associates, LLC with the MGMA Cost Survey: 200X Report Based on 200X Data.
2
| Multi Surgical Associates | MGMA Cost
Survey:
Anesthesiology |
|
| Contractual Disallowances | 46.9% |
47.4%
|
| Adjusted Collection Ratio | 93.3% |
95.1% |
| Number of Days Gross Billings* | 135.3 |
49.3
|
| Accounts Receivable Aging: | ||
Current |
51.8% |
51.0% |
31-60 Days |
14.4% |
17.0% |
61-90 Days |
9.8% |
9.7%
|
91-120 Days |
6.7% |
5.8%
|
Over 120 Days |
17.3% |
14.7%
|
| *Accounts receivable have not been adjusted for
non-qualifying or uncollectible charges. The practice estimates 50% of
the accounts receivable is uncollectible.
|
||
Accounts receivable management is good.
The following
table compares the practice overhead expenses Multi Surgical
Associates, LLC with the MGMA Cost Survey: 200X Report Based on 200X Data.
| Multi Surgical Associates 12/31/0X |
MGMA Cost Survey Median |
|
| Practice Overhead Expense Ratio | 8.7% |
10.7% |
| Professional Liability Insurance | 2.1% |
2.0%
|
| Billing Service | 5.0% |
2.4%
|
| Non-Primary Expenses | 1.6% |
6.3% |
Expenses are
well managed. Practice overhead expense
ratios lag the MGMA Survey sample; net practice income and EBITDA are above
market.
Multi Surgical
Associates, LLC is a strong, emerging anesthesiology practice that possesses
the external as well as internal dynamics to drive it to higher levels of
production, net practice income and EBITDA.
Production per full time equivalent (FTE) anesthesiologist exceeds comparable practices. Gross practice income is on the rise; EBITDA is strong; expenses are well managed and accounts receivable management is good.
The active patient population is sizable. The service mix as well as the payer profile show the breadth and broad scope of the practice. Patient service capacity is extensive. Surgicare of Central Jersey, Inc. is a strong referent.
Managed care participation together
with the provider agreement by and between Multi Surgical
Associates, LLC and Surgicare, Inc. extend the catchment area and provide a reservoir of new
patients.
Value
of Subject Practice
If the provider agreement by and
between Multi Surgical Associates, LLC and Surgicare,
Inc. is for a duration of three years,
the fair market value of the tangible assets and patient records of Multi
Surgical Associates, LLC is four million six hundred sixty thousand dollars
($4,660,000).
If the provider agreement is for a
duration of five years, the fair market value of the aforementioned assets is
six million eight hundred seventy-five thousand dollars ($6,875,000); if said
agreement is for a duration of seven years, fair market value is eight million
two hundred fifty thousand dollars ($8,250,000); if the agreement is for a duration
of ten years, fair market value is nine million three hundred thousand dollars
($9,300,000).
The fair market value of the tangible
assets and patient records of Multi Surgical
Associates, LLC
does not include the value of the accounts receivable.
3
APPRAISAL
Revenue Ruling 59‑60
Revenue Ruling 59‑60, Internal Revenue
Bulletin 1959‑9, as modified by Revenue Ruling 65-193, I.R.B. 1965-2, and
Revenue Ruling 68-609, I.R.B. 1968-48, outlines as well as reviews the
approach, the methods and the factors that an appraiser should consider in
order to determine the value of a closely held company such as a professional
practice. The following factors, which are fundamental, require careful
a.
The nature of the business and history of the company or
practice.
b.
The general economic outlook as well as the outlook for the
industry or profession.
c.
The book value of the capital stock and financial condition
of the company.
d.
Earning capacity..
e.
Dividend paying capacity.
f.
Whether there is goodwill or any other intangible value.
g.
The price of the most recent public sale of the company
stock and the size of the stock offering.
h.
The market price of the stock of comparable companies that
are actively traded on either a national, regional or over-the-counter stock
exchange.
Although the valuation of a closely
held company requires consideration of all these relevant valuation factors,
certain factors carry more weight than others.
A determination of value will depend upon the circumstances in each
case. Earnings could be the most
important criterion in some cases, whereas the value of the tangible assets
could be more important in others. In
general, primary consideration should be accorded earning capacity in the
valuation of an entity that sells products or services to the public. If earnings are absent, then greater weight
should be accorded the value of the tangible assets.
In a publicly held company, value is
determined by the market price of the common and preferred stock. In a closely held company or a professional
practice, value cannot be fixed by the capital markets. It can only be determined by the ability of
the business to generate profit.
In the final analysis, the value of a
specific closely held company or professional practice depends upon the degree
of optimism or pessimism the market has regarding the reliability and
continuity of its earning capacity.
Uncertainty decreases value.
The value of a professional practice is
determined by the likelihood of retaining business from existing and
prospective patients or referents. In a
professional practice, the emphasis is on the amount of professional goodwill
that can be transferred from one doctor to another. This differs from a non-professional business
where the emphasis is on the commercial goodwill that stems from trade marks, product line, brand name, et cetera.
Revenue Ruling 59-60 states that a
sound appraisal of a closely held company or professional practice must
consider current and prospective economic conditions as of the date of the
appraisal.
4
Although the appraiser should obtain
profit-and-loss statements for a representative period of time, emphasis should
be placed on current earnings, rather than a projection of future earnings,
which could be uncertain and speculative, or past events, which are not likely
to recur.
In order to apply Revenue Ruling 59-60
in the valuation of a professional practice, it is necessary to capitalize
current earnings or discount future earnings at a capitalization rate or
discount rate that indicates the potential erosion in professional
goodwill. The most important criteria in
determining a capitalization rate or discount rate are:
5
Standard of Value
The fair market value of a professional
practice is the price at which a subject practice would change hands between a
willing buyer and a willing seller, when the former is not under any compulsion
to buy and the latter is not under any compulsion to sell. The hypothetical buyer and seller are assumed
to be able, as well as willing, to trade and are informed about the property
and the market for such property.
Fair market value takes into account
the special advantages of an established practice such as practice reputation,
maldistribution, location, patient management, professional referents, et
cetera which contribute to earning capacity.
Fair market value indicates the
likelihood that the patients of record will continue to purchase medical
services as long as the quality of patient care is satisfactory and the
professional standards of the practice are maintained, and therefore, it
reflects the amount of professional goodwill that can be transferred from one
doctor to another.
6
Method of Appraisal
There are three generally accepted
approaches that are used to determine the value of a professional
practice: Income Approach, Market
Approach, Cost Approach.
1.
Income Approach
The income approach either capitalizes
current earnings or cash flow or discounts future earnings or cash flow to
determine the present worth of the future benefits of an ownership interest in
a company or professional practice.
The two-income approach methods of
appraisal are:
A.
Capitalized-Return Method
The
capitalized-return method is used when the historical operating trend of a
company is indicative of its future operating trend. In other words, the annual rate
of growth (decline) in the operations of the company fluctuate around a
trend line that is predictable.
The
capitalized-return method converts a current stream of income into a standard
of value. The capitalization rate is a
divisor or a multiplier that is used to compute the present worth of a
single-period benefit stream. The
single-period benefit stream is the net earnings or net cash flow the practice
is expected to generate in the future.
There are many
versions of the capitalized-return method.
The capitalization-of-earnings method, debt-capacity method and
excess-earnings method are three of the most widely used. The capitalization-of-earnings method and the
debt-capacity method are similar because both compute the present worth of a
single-period benefit stream.
The
Capitalization-of-Earnings Method
The focus of
the capitalization-of-earnings method is on the rate of return a practice owner
or buyer expects to receive from his/her investment in the practice. The rate of return includes income as well as
capital appreciation. The capitalization
rate is determined by the rate of return available in the market for risk-free
investments plus a premium to compensate the investor for the lack of liquidity
and capital-risk assumption.
The
Debt-Capacity Method
The
debt-capacity method capitalizes earnings or cash flow to determine the maximum
amount of debt a practice can service. The focus is on the break-even point or
the amount of projected income collected the practice must generate to meet all
fixed and variable practice expenses as well as pay the doctor(s) a market rate
of compensation and amortize debt.
7
The
capitalization rate, which is determined by the capital risk inherent in the
EBITDA or adjusted net cash flow of the practice, determines the amount of
money a prudent lender would extend to a qualified borrower. This is the maximum price a willing buyer can
afford to pay or the maximum financial leverage of the practice.
The
Excess-Earnings Method
The
excess-earnings method, which capitalizes the earnings or cash flow in excess
of a fair rate of return on the tangible assets in order to determine the value
of the intangible assets, uses two capitalization rates. The capitalization
rate on the tangible assets is the rate of return required to attract
capital. The capitalization rate on the
intangible assets is the rate of return available in the market for risk-free
investments plus a premium for risk and the lack of liquidity.
B.
Discounted-Future-Return Method
The
discounted-future-return method is used when the future operating trend of the
company is expected to differ significantly from the historical operating
trend.
The
discounted-future-return method discounts a future stream of income to
determine its present value. The
discount rate is the rate of return a practice owner or buyer expects to
receive from his investment. The
discount rate determines the present value factors used to compute the present
value of multiple-benefit periods.
2.
Market Approach
The market approach assumes that the
value of a specific company or practice can be determined by establishing the
value of a guideline company or practice.
For example, the value of specific professional practice can be
determined by the ratio of the sale price to the total income collected of
comparable practices which have recently been sold.
The market approach is based upon the
principle of substitution, which states that a prudent buyer will pay no more
for a practice than it would cost to acquire a substitute practice that
provides the same benefits.
3.
The Cost Approach
The focus of the cost approach is on
the value of a specific company or professional practice's assets, not its
earning capacity. Since the cost
approach does not take into account the earnings or cash flow that the assets
produce, it disregards intangible assets and concentrates on tangible assets.
The two-cost approach methods are:
A.
Net-Worth Method
The net-worth
method assumes the value of a specific company or professional practice is the
value of the adjusted fair market value of its assets minus the adjusted fair
market value of its liabilities.
8
B.
Liquidation Method
The
liquidation method assumes the subject company or practice will cease to
operate, sell all its assets and use the proceeds to liquidate its liabilities.
A professional practice possesses
unique characteristics that a non-professional company does not possess. Consequently, certain valuation approaches or
methods of appraisal are not appropriate and should not be used to value a
professional practice.
For example, since few, if any, medical
practices are comparable, the market approach has severe limitations and should
only be used in conjunction with another appraisal method. In a professional practice, the emphasis is
on the value of professional goodwill.
The cost approach disregards
professional goodwill and concentrates on the value of the tangible assets
Since the discounted-future-return
method relies on a projection of future earnings, it can be speculative and
misleading. The excess-earnings method
focuses on the value of the intangible assets not the value of the business
enterprise. It is difficult to apply and
has a history marked by controversy and misuse.
In the opinion of the appraiser, the
debt-capacity version of the capitalized-return method of the income approach
is the most appropriate appraisal method for the valuation of a professional
practice. The capitalization-of-earnings
method and the debt-capacity method are similar; both capitalize EBITDA or
adjusted net cash flow to determine the present worth of a single-period
benefit stream.
However, since the focus of the
debt-capacity method is on the transfer risk or amount of goodwill that can be
transferred from one doctor to another, it is the most fitting method of
appraisal to value a professional practice
The Debt-Capacity Method is designed to
place a value on a practice that will simultaneously provide the practice owner
or buyer with enough time and cash flow to service debt, compensate him/her for
rendering professional services, and give the practice owner a realistic value
for professional goodwill.
DEBT-CAPACITY
METHOD
VALUE = (ADJUSTED
NET CASH FLOW) X AMORTIZATION FACTOR
(CAPITALIZATION
RATE)
DEFINITIONS:
Adjusted Net Cash Flow
EBITDA or adjusted net cash flow is the
cash flow available for debt amortization before income taxes but after fixed
and variable expenses and professional compensation are paid. Non-recurring or extra-ordinary expenses as
well as excess professional wages and discretionary fringe benefits are
eliminated to normalize practice earnings.
9
Debt Service Coverage Ratio (DSCR)
The Debt Service Coverage Ratio (DSCR)
reflects the risk peculiar to a specific subject practice as well as the
general economic outlook and the outlook for the health-care industry. The DSCR
indicates the transfer risk or potential erosion of professional goodwill. The
lower the risk, the lower the capitalization rate and the higher the value of
the practice.
The precise DSCR depends upon medical
economics, the quality of practice EBITDA, the predictability of future EBITDA
and the perceived risk of attrition regarding the amount of professional
goodwill that can be transferred from doctor to doctor as of the date of
valuation.
Amortization Factor
The amortization factor, which is the
statistical summation of the terms and conditions of a credit accommodation,
reflects the principal ratio and term of the loan.
The principal ratio, which is the
percentage of each loan payment that is applied to principal, is a function of
the interest rate and the term of the loan.
The term or repayment period of the
debt is determined by the term limits for commercial loans set by a lender
according to credit policy.
Since medical practice accounting is
cash-basis accounting, income is recognized when services are collected, not
billed. Consequently, accounts
receivable reflect future, not current, income.
Since accounts receivable do not appear
on the balance sheet of a professional practice, Appraiser Debt-Capacity Method
does not take into account the value of the accounts receivable. These assets should be valued separately.
10
PURPOSE OF APPRAISAL
Appraiser has been engaged to appraise
the debt-free value of the ownership interest of the twenty
seven members of Multi Surgical Associates,
LLC in
the tangible assets and patient records of the subject medical practice. The appraisal is being conducted to determine
the fair market value of the aforementioned assets for the purpose of the
development of a specific, targeted strategic plan.
The effective date of the
appraisal is December 31, 200X; the date of the report is May 24, 200X.
In order to determine the fair market
value of said tangible assets and patient records, the appraiser reviewed the
profit-and-loss statements of Multi Surgical
Associates, LLC for the fiscal year ended December 31, 200X, December 31,
200X and December 31, 200X as well as management reports and other pertinent
statistical data and information for the subject practice and Surgicare,, Inc. that were
available.
The appraiser did not review the
profit-and-loss statements of Multi Surgical
Associates, LLC or other management reports, pertinent statistical data and
information for the subject practice or Surgicare,
Inc. for any prior or subsequent
fiscal year or interim period.
11
VALUATION
Fair Market Value
Appraiser has been engaged to appraise
the debt-free value of the ownership interest of the twenty
seven members of Multi Surgical
Associates, LLC in the tangible assets and patient records of the subject
medical practice. The appraisal is being
conducted for the purpose the development of a specific strategic management
plan.
Upon careful examination and analysis
of the relevant industry-specific and practice-specific valuation factors, it is
the opinion of Appraiser, that,if the provider
agreement by and between Multi Surgical
Associates, LLC and Surgicare, Inc. is for a duration of three years, the fair market value of
the tangible assets and patient records of Multi Surgical
Associates, LLC s of December 31, 2004 is four million six hundred sixty
thousand dollars ($4,660,000).
If said provider agreement is for a
duration of five years, it is the opinion of Appraiser that the fair market
value of the aforementioned assets of the subject limited liability company is
six million eight hundred seventy five thousand dollars ($6,875,000); if the
provider agreement is for a duration of seven years, the fair market value of
said assets is eight million two hundred fifty thousand dollars ($8,250,000);
if the provider agreement is for a duration of ten years, the fair market value
is nine million three hundred thousand dollars ($9,300,000).
The fair market value of the tangible
assets and patient records of Multi Surgical
Associates, LLC does not include the value of the accounts receivable. These assets should be valued separately.
Appraiser assumes the tangible assets
and patient records of Multi Surgical
Associates, LLC are owned free and clear of all liens.
DEBT-CAPACITY
METHOD
VALUE = (ADJUSTED
NET CASH FLOW) X AMORTIZATION FACTOR
(CAPITALIZATION RATE)
ASSUMPTIONS:
PROVIDER
AGREEMENT Three Years Five Years Seven Years Ten
Years
1. EBITDA $1,894,508 $1,894,508 $1,894,508 $1,894,508
2. DSCR* 1.08 1.12 1.21 1.38
3. Amortization Factor 2.667 4.082
5.283
6.780
*The equivalent rate for the
Capitalization-of-Earnings method is 41% if the provider agreement is for a
duration of three years; 28% if the duration of the agreement is five years;
23% if the duration is seven years; and, if the duration of the agreement
is for a duration of ten years, the equivalent capitalization rate is 20%.
12
Break
Even Point
Break Even Point analysis projects the amount of total income collected that must be generated from patient-service activities to meet all fixed and variable practice expenses, pay the doctor(s) a market rate of compensation for rendering professional services and amortize the maximum loan the practice is able to service.
BREAK EVEN POINT = TOTAL FIXED COST
1.0
‑ % VARIABLE COST
DEFINITIONS:
Total Fixed
Cost: Any expense, such as fixed practice expenses,
professional compensation and loan amortization that does not vary with the
number of patient visits. Fixed practice
expenses include items such as rent, staff salary, insurance, and utilities and
telephone.
Variable Cost: Any practice expense, such as clinical
supplies, laboratory fees and non‑yellow page advertising that will vary with
the number of patient visits. % Variable
Cost is the ratio of variable cost to total income collected.
ASSUMPTIONS:
PROVIDER
AGREEMENT Three Years Five Years Seven Years Ten
Years
1. Fixed Practice Expense $154,112 $154,112 $154,112 $154,112
2. Physician Wages $1,904,481 $1,904,481 $1,904,481 $1,904,481
3. Loan Amortization $1,747,938 $1,685,512 $1,560,659 $1,373,380
Total Fixed Expense $3,806,531 $3,744,105 $3,619,252 $3,431,973
If the
provider agreement by and between Multi Surgical
Associates, LLC
and Surgicare, Inc.
is
for a duration of three years and the fair market value of the tangible assets
and patient records of the subject is $4,660,000, the total income collected
that must be generated to break even is $4,007,465 assuming total fixed expenses
as aforesaid.
If said provider agreement is for a duration of five years and fair market value is $6,875,000, the break even point is $3,941,744; if the provider agreement is for a seven year duration and fair market value is $8,250,000, the break even point is $3,619,252; and if the provider agreement is for duration of ten years and fair market value is $9,300,000, the break even point is $3,431,973.
13
Multi Surgical Associates, LLC
Notes
to the Adjusted 12/31/0X Statement of Revenue and Expense
NOTE 1: Federal Tax Provision
Appraiser does not provide accounting advice or legal counsel. Individual income tax strategies as well as provisions of the federal and state tax code are complex and ever-changing. Tax questions, as well as the provisions of contract law, should be reviewed carefully with accounting and legal professionals.
NOTE 2: State Tax Provision
Appraiser does not provide accounting
advice or legal counsel. Individual
income tax strategies as well as provisions of the federal and state tax code
are complex and ever-changing. Tax questions, as well as the provisions of
contract law, should be reviewed carefully with accounting and legal
professionals.
NOTE 3: Loan Amortization
The adjusted statement of revenue and
expense assumes the following terms and conditions for the requisite term debt:
Interest
Rate Prime + 1%,
or 5.00%
Repayment Period The repayment term
will correspond to the duration of the provider agreement by and between Multi
Surgical Associates, LLC and Surgicare, Inc.
As of the effective date, December 31,
200X, the commercial bank prime rate of interest as reported in the Wall Street Journal
was 4.00%. Because the prime rate of
interest is subject to change from time to time, there may be differences
between the proforma and actual results and those differences might be material. Appraiser assumes no responsibility or
liability for said differences.
Principal and interest payments
commence immediately.
14
STATEMENT OF QUALIFICATIONS,
LIMITATIONS AND CERTIFICATION
The accompanying appraisal report was
prepared Multi Surgical Associates,
LLC for
the purpose specified herein and is only valid for the specified valuation
date. It is not valid for any other valuation date and should not be used for
any other purpose. The information
contained in the report has been obtained from sources considered reliable;
however, the appraiser assumes no liability for such sources.
The opinions expressed herein are
dependent upon the accuracy of the information received and pertain solely to
this report and should not be taken out of the context of this report. This
appraisal is subject to such conditions or circumstances that an investigation
of the practice would disclose. The
appraisal assumes that practice assets are owned free and clear of liens and
encumbrances.
There may be differences between the
adjusted and actual results because events and circumstances frequently do not
occur as expected and those differences might be material. Appraiser assumes no
responsibility or liability for any deviation in the performance of the
practice for any period subsequent to the date hereof.
Tax questions, as well as provisions of
contract law, should be reviewed carefully with legal and accounting
professionals.
I certify that, according to the best
of my knowledge and belief:
1.
The analysis and conclusion expressed herein are limited by
appraisal qualifications and limitations and are the unbiased, professional
opinion of the appraiser.
2.
Neither Appraiser nor its principals or employees have any
present or contemplated future interest in the property that is the subject of
this report.
3.
The fee paid to Appraiser for determining the value of the
subject practice is not contingent upon the amount of an award in a property
settlement or court action; or the consummation of a purchase and/or sale
transaction; or any conclusion specified in advance by the client; or the
amount of the appraised value; or the occurrence of any subsequent event.
4.
The analysis and conclusions expressed herein and this
report conform to the Uniform Standards of Professional Appraisal Practice.
This report and its analytical methods,
in whole and in part, constitute confidential proprietary information to which Appraiser
reserves and protects all rights and interests.
Beyond its own use, as described to Appraiser by the client, the
recipient agrees to keep confidential the entire report.
David J. Shuffler
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David J.
Shuffler
David J. Shuffler is a valuation expert
offering physicians and other health care professionals a wide range of
consulting services such as Practice Appraisal; Business and Strategic
Planning; System Development and Implementation and Negotiation and Contract
Development.
Mr. Shuffler is a specialist in
practice valuation, business management and practice finance for physicians,
dentists, veterinarians and other medical professionals. He has appraised over 750 health care
practices and has been court appointed to perform practice appraisals and offer
expert witness testimony in New Jersey, Alaska, New Hampshire, Pennsylvania and
Wisconsin. He adheres to the Uniform
Standards of Professional Appraisal Practice of the Appraisal Foundation and
Principals of Appraisal Practice and Code of Ethics of the American Society of
Appraisers.
Mr. Shuffler was a relationship manager
and health care lender at Commerce Bank.
He also founded 7/49 Solutions, LLC and its predecessor specialists in
health care appraisal, medical practice management and dental and chiropractic
brokerage. Mr. Shuffler established and
managed the medical practice finance group at Midlantic Bank and National
Westminster Bank, NJ. He developed
credit criteria for extending loans to medical professionals and underwrote
over $140 million in loans.
Mr. Shuffler has written curriculum and
presented seminars for professional organizations, dental and chiropractic
colleges and medical residency programs and authored appraisal and practice
management articles for medical periodicals such as Medical Economics, Journal
of the American Chiropractic Association, Optometry Economics, Podiatry
Management and Journal of the New Jersey Dental Association. His “Practice Hotline” column appeared in the
Bergen County Medical Society Medical Report, Passaic County Medical Society
News and Notes, and Journal of the New Jersey Dental Association. Mr. Shuffler also authored “The Beginning
Physician’s Guide for Financing a Practice.”
His presented his workshop “The
Partnership Track” at the Atlantic Coast Veterinary Conference and spoke to the
Medical Society of New Jersey on “Setting the Right Price for Your
Practice.” He addressed the Bergen
County Bar Association; American Academy of Matrimonial Attorneys, NJ Chapter;
Association of Trial Lawyers of America, NJ Chapter; Family Law Section, The
Inns of Court Program and Passaic County Chapter of the New Jersey Society of
CPAs on “How to Value a Medical Practice in These Changing Times.”
Mr. Shuffler received a Bachelor of Science in Economics with a concentration in marketing and finance from the Wharton School of Finance and Commerce, University of Pennsylvania.
16
GUEST SPEAKER:
Medical
Society of New Jersey Mountainside
Hospital Medical Center
University of
Medicine & Dentistry of NJ Englewood
Hospital & Medical Center
New Jersey
Hospital Association Bergen
County Medical Society
Palmer College
of Chiropractic Bronx
County Medical Society
St. Joseph’s
Hospital & Medical Center Jersey
City Medical Center
New York
Chiropractic College St.
Barnabas Medical Center
St. Mary’s
Medical Center Passaic
County Medical Society
N.J. Assn. of
Certified Public Accountants N.J.
Veterinary Medical Association
Middlesex
County Medical Society Atlantic
Coast Veterinary Conference
American
Academy of Matrimonial Lawyers Union
County Dental Society
Westchester
County Medical Society Association
of Trial Lawyers of America NJ
Chapter
American
Chiropractic Association Bergen
County Bar Association
American
Society of Appraisers Chapter #73 Family
Law, Inns of Court Program
Hackensack
University Medical Center America
Outdoors
PUBLICATIONS:
Journal of the American Chiropractic Association
“How to Turn a Successful Associateship
into a Successful Partnership”
Chiropractic Showcase Magazine
“The Partnership Track”.
“What is Your Associate’s Worker
Status?”
“Group Practice: A Strategic Response to a
Changing Health-Care Environment”
Chiropractic Economics
“The New-Doctor’s Associate Employment
Agreement” Medical Economics
“Setting the Right Price
for Your Practice” Quoted extensively.
“Do You Need a Broker to Help Sell Your
Practice?” Quoted extensively.
The Medical Report
“The Practice Hotline” - A Quarterly Q
& A Column for the Bergen County Medical Society.
News and Notes
“The Practice Hotline” - A Quarterly Q
& A Column for the Passaic County Medical Society.
Optometric Economics
“Seeking the Substance of Practice
Valuation”
Podiatry Management
“Buying and Selling a Practice”
Journal of the New Jersey Dental Association
“Let’s Make a Deal: A Dentist’s Guide to
Buying and Selling A Practice”
“Mergers and Groups without Walls: The
Salvation of Private Practice”
“The Practice Hotline” - A Quarterly Q
& A Column.
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