By Bruce Bryen, CPA, CVA
A dental practice evaluation is much different than that of a non-professional business such as a manufacturing company. Our expert explains.
One of the most economical approaches for divorce for the dentist is to try mediation to finalize the decision about the determination of value for his or her dental practice. This is also a similar method to economize for the spouse as well.
Since it is rare for a dentist to be involved with a court and lawsuit, the unknown time, effort and cost of such a disposition of value in the hands of attorneys, experts and a judge is almost surely something that the dentist is not aware. With the dentist and the spouse each retaining lawyers and experts for presentation to a court, the amount of money involved for payment to these advocates will become unbelievably high.
The time away from the dental practice and the loss of revenue to it is another factor of which the dentist and spouse are probably not aware. If the parties involved were to retain a dental practice evaluator who presents the facts as to value of the dental practice and is not an advocate for either the dentist or the spouse, the fees are much lower, the effort and time expended is less and the results are known more quickly and accurately to each of those in the dispute, as mediation becomes the answer.
Advocates of those who compensate them invariably argue when no debate may be necessary. Minor points considered in a lawsuit do not matter when each party is interested in a fair and equitable settlement and the resumption of a normal life. The difference of opinion between the advocates creates protracted litigation and fees and aggravation to all.
When one person is involved with a presentation on behalf of each participant in the dispute, and when that person has the experience and expertise to settle any dispute such as a mediator, an end is in sight. The mediator will want to rely on one expert to settle things so that the mediation does not end in litigation. If the dentist and the spouse each know that their lives will be more quickly prepared for their futures and more money will be in their pockets rather than the attorneys and other experts, mediation is definitely a faster approach to begin the next phase for each.
Who can offer dual representation and who can not?
When trying to resolve a divorce with as much money left for the dentist and spouse as possible and not for their representatives, a point to consider is to forgo the attorneys, CPAs and other experts who would advocate for each client and to look to an independent evaluator of the dental practice.
It is unethical for attorneys to represent two parties in the same litigation. CPAs probably should not represent both individuals in a dispute, although they may, on an ethical basis. An independent evaluator with experience in determining the value of a dental practice can be retained by the dentist and spouse jointly and present the facts without bias towards either. An engagement letter of representation signed by the dentist and spouse will allow the independent appraiser to begin the process for much less cost to each. The evaluator would not be acting as an expert or advocate for either but only as a presenter of facts about the dental practice worth.
When discussing mediation as a method for dissolution of the marriage and settlement of probably the most valuable asset owned by the dentist, the spouse wants an independent person to present a fair value for himself or herself as well as the dentist to avoid the acrimony, expense and aggravation of a protracted process involving a court.
What costs, time expended and results of the dual representation are expected? Who may take on this role?
A professional mediator will want an expert dental evaluator to assist him or her with the determination of the dental practice value and settlement process with the spouse and dentist. That appraiser should have a track record including having had experience in these valuations, such as having prepared many and not just being able to say that he or she is a business evaluator.
A dental practice evaluation is much different than that of a non-professional business such as a manufacturing company. Having published articles about litigation and divorce is an important criterion as well to assist in establishing the credentials of the evaluator. Fees are high but much less than the costly litigation process. An excellent designation for the evaluator is that of a certified valuation analyst. The expertise and experience in dental valuations is a must.