What effect does divorce have on dental practice values?

During divorce proceedings, dental practice values typically decrease and many times that reduction in value is a substantial one. What are some of the reasons for this effect that at times is challenged by the non-dental spouse’s advisers or the ex-spouse?

Of course, the stress of the divorce may be weighing heavily upon the dentist so that he or she can’t work with the efficiency and stamina that was available prior to the divorce proceedings. The meetings with attorneys, the dental CPA and other experts may be just too much for the dentist to be able to cope with while still attempting to maintain a successful practice. Depositions and the process of discovery may be wearing down the dentist’s health and the ability to concentrate on patients and their needs. Enormous amounts of paperwork for the support of expenses and revenue occurring within the practice prior to and during the divorce must be made available for the advisers to the dentist and the ex-spouse. The right to contest these proofs of reporting by the dentist also take a great deal of time in order to prepare for their response to the ex-spouse and his or her experts.

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Besides the effort and energy spent by the dentist gathering data, charges for services beyond the expectation of the dentist’s reality start to appear as well that the dentist must pay in order to continue defending himself or herself. An additional problem is that while these charges are continuing and the time is being spent by the dentist with information gathering, the loss of patient revenue takes place since the dentist cannot prepare for a possible arbitration hearing or trial as well as spend the amount of time previously allowed in the treating of patients during normal business hours. Something must be put aside.  

Can the loss of time and professional charges be curtailed? 

There are a number of issues with the time being spent by the dentist and how to reduce it. If confidentiality questions are important, the dentist may not want anyone else at the office to assist in gathering data because that person would then have access to a lot of personal and office financial information. A point to consider may be for the dentist to spend the time working on the data needed by the experts in the evening or during the weekend. That may add additional stress to this exercise, but it will at least allow the dentist to continue seeing patients and collecting revenue to help pay the professional bills that are accumulating. The charges from the advisers may be reduced by having the dentist do as much of the work as possible so that the experts are involved with as little of the detail accumulation as feasible. The important thing to remember is that the best people should be retained by the dentist to make sure that as little time and money is going where it does not have to go. 

Hire the best people regardless of cost

Sometimes it seems as though one person’s charge for the type of expert consulting and reporting may be much more than others who have been interviewed to be retained. The experienced expert in the field of divorce is someone who is typically very busy and does not have to waste time on trivial matters that are billable. This person may charge more in the short term, but overall the costs will be remarkably cheaper since the expert in this field understands what has to be done and knows how to do it. A dental CPA with experience in divorce work will complete the assignment and have the best report available for settlement discussions and the courtroom because of his or her expertise in this not so typical field of endeavor. A CPA or evaluator of dental practices with few experiences or courtroom appearances may charge less in the early stages but will eventually charge more because of the lack of experience and expertise in presenting information to a mediator or to a court. Many times the dental CPA must guide the attorney since there are few attorneys with any type of experience in representing dental practices and the valuation techniques that are involved. One reason is that even though dentists and attorneys are both professionals, the existence of goodwill and the financial valuation of dental practices and law firms are incredibly different.  

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Taking key steps can protect you and your practice during this difficult time and also set you up for future success.