Business Valuation Blog | Understanding Buying / Selling a Company

What's Unique About a Health and Wellness Business Valuation?

Posted by Business Valuation Specialists LLC on Dec 23, 2019 8:00:00 AM

Health & Wellness Business Valuation

There are a wide range of businesses in operation today to help keep us in the best possible health, and those businesses each hold a value that can be calculated on a wide range of factors. However, a health and wellness business valuation can be a little different than other types of valuations that are performed to calculate value. What are these differences, how can they impact your business and how do you determine which ones need to be fixed? Here's a quick look at the overall process to help you get started.

What's Unique About a Health and Wellness Business Valuation?

  • Reputation: As a health and wellness business, your reputation is of paramount importance to your company's value. You wouldn't take your car to a bad mechanic and hope everything would be okay, right? Neither will your patients and customers want to go to a practitioner who has a poor reputation. That reputation has value, which is taken into consideration for your company's appraisal. Practitioners and offices that have exceptional reputations will have much more business, can charge a premium for their services and their practice will have a much higher resale price.
  • Services Plus Product Sales: Many businesses provide either services or products, but often with health and wellness businesses, there's a unique combination of both to facilitate patient care. A chiropractor offers specific muscle rubs to help clients between visits. A spa offers a range of anti-aging products to improve appearances between treatments. This combination of service value plus inventory must be carefully taken into account when your business' value is determined, a task that is best handled by a qualified business appraisal specialist for that specific reason.
  • Market: Right now, people are very aware of their health issues, and it's popular to take steps to stay in shape, improve your outlook or take care of old health problems. That makes the health and wellness market very popular right now and gives health and wellness businesses a higher profit margin when they are being bought and sold. However, if that market were to slump, such as around the 2008 economic recession, that will also impact value, lowering the value of the business, which must be taken into consideration. A business valuation will reflect the value of your business at a specific point in time.
  • Training: One of the constants in health and wellness is regular training. Your staff's certifications show that you have additional capabilities that other practitioners or businesses may not be able to offer, and that has value. A massage therapist who only has a regular state certificate will not have the volume of business that a therapist with certifications in cranial-sacral release, maternity massage or similar certificates, and that volume will be reflected in the company's value due to the difference in business income.

By having a good understanding of how your company's value comes together, a health and wellness business valuation can provide you with significant insights into where you can improve your business to maximize your profitability, either during regular operations or when you're changing ownership. However, it's important to have your business valuation performed by an experienced, accredited valuation specialist who will provide you with an honest calculation of value.

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Topics: Health & Wellness Business Appraisal