Why Rules of Thumb are Dangerous

One Medical Practice Could—Depending on How Rules of Thumb are Applied—be Valued at Several Radically Different Prices. Find Out Why!

Paul Hyde, in a recent Around the Valuation World™ in 90 Minutes webinar, explained why rules of thumb are dangerous to rely on for valuation. The focus of his argument relied on six simple graphics that illustrated how the value of one hypothetical medical practice could—depending on how a rule of thumb is applied—be assessed at either $800,000 or $200,000 . . . or any number of different variations in between!

There is simply no substitute for a well-prepared business appraisal by a qualified and experienced business appraiser.    Study these six graphics to see for yourself how wide a range of possible values a purely rule-of-thumb approach could bring.  

Paul R. Hyde, EA, MCBA, ASA, MAI, prepared these slides for a recent Around the Valuation World™ in 90 Minutes webinar.   

The six slides below illustrate how the value of one hypothetical medical practice could—depending on how a rule of thumb is applied—be assessed at either $800,000 or $200,000…or any number of different variations in between!

Find out more about this helpful webinar series here.

To view Paul R. Hyde’s original article in the Second Quarter 2011 issue of Business Appraisal Practice, CLICK HERE.¹

¹ Reprinted with permission, Institute of Business Appraisers.