Considering A Medical Practice Merger? Equipment Appraisal Basics

Medical center mergers are becoming more common as facilities look to grow their patient base and expand their care offerings. However, you cannot adequately or accurately complete any merger with another medical care facility unless you know the financials are sound. One thing you should never overlook is obtaining an accurate and comprehensive appraisal of the medical equipment that the prospective center owns. Here's what you need to know about these mergers and the importance of these appraisals.

What Exactly Is A Medical Equipment Appraisal?

A medical equipment appraisal is a process that determines the value of existing medical equipment. The appraiser will have direct experience with medical equipment and terminology, and that industry experience will help them to assess each piece of equipment. The appraisal is designed to help you understand not only the value but also the replacement cost, as well as the remaining life left in the equipment.

How Does A Medical Equipment Appraiser Determine Equipment Value?

Given the fact that a medical equipment appraiser is typically a specialist in the medical equipment field, much of the appraisal process is based on standard industry knowledge of the equipment, its base value, the average depreciation, and any special adjustments for specific types of use.

However, some medical equipment, such as that for specialty practices, cannot be valued as easily. When it comes to specialty equipment, the appraiser may not have the same range of knowledge. He or she may have to research the equipment to arrive at an accurate appraisal.

That process can include all sorts of steps, such as contacting the equipment's manufacturer for its retail value and estimated lifespan, researching similar equipment in the market, and communicating with prospective buyers of such equipment. Combining much of this information will help the appraiser arrive at a more accurate value.

How Can A Medical Equipment Appraisal Help You?

The information that a medical equipment appraisal generates can help you in many different ways. For example, your tax accounting will be more accurate because you'll have the actual value of the assets as well as the amount of depreciation you should be accounting for to date. In addition, it will clearly identify the current market value of all of those assets, which is an important factor when you are negotiating pricing for an acquisition or any kind of merger. You cannot effectively negotiate the terms of the deal if you don't have a solid understanding of the value of the practice, including its current assets.

Why Is A Medical Equipment Appraisal Helpful In Mergers Or Medical Practice Acquisitions?

There are many reasons why a medical equipment appraisal is helpful during an acquisition or a merger process. In fact, in some cases, the IRS may require it as part of the documentation for the merger. This ensures accurate assessments of each company's value in the deal.

In addition, it will help you to ensure that there's a fair price assigned if you're buying another practice. It prevents the other party from inflating their asset value and charging you far more than the practice is worth. For a merger situation, equipment appraisal can ensure that the parties have balanced equity based on the assets that they are bringing into the agreement.

The sooner you seek a medical equipment appraisal, the better negotiating ground you'll have during any business contract discussions. You'll have a solid understanding of the company's value, which ensures that you are not under-bid. It also ensures that you don't settle for less than what the practice is worth. Contact a medical equipment appraiser near you today for more information and guidance.