First Look Workflow

Welcome to the Derm Analysis Group First Look Portal

What is a First Look? The First Look portal is designed to help you gather and organize the necessary information for an initial "first look" valuation of your practice.

A First Look is a high-level preliminary assessment of your practice's revenues and expenses. This evaluation will provide you with an estimated range of potential selling prices for your practice in the market.

How does this portal work? The portal is divided into different sections:

1. Practice Questionnaire
2. Financial Data Upload
   1. Profit & Loss Statements
   2. Balance Sheet
   3. General Ledger
   4. Personal Expenses/Adjustment
3. Payroll Data Upload
4. Business Operations Data Upload (from an EMR, Practice Management, or PoS system)
5. Lease Contract
6. Business Insurance
7. Equipment & Assets
8. Formation Documentation
9. Provider Contracts

Each section will guide you through the specific data required to provide a comprehensive preliminary valuation estimate.

EMPLOYMENT & COMPENSATION

Overview of organizational structure with # of employees in different positions (NAMES CAN BE REDACTED), compensation and tenure with the organization. 

For the compensation model, generally, how are the main providers in the practice paid? Day rate? Salary? % of Collections?

You can download the Employee Census template and upload the filled-up document on upload button below

Describe a typical weekly staffing schedule at the practice, how many employees are working per day and their positions

OPERATIONS

OWNERSHIP

SERVICES

UTILIZATION, MARKETING, RECALL

EMPLOYMENT & COMPENSATION

Overview of organizational structure with # of employees in different positions (NAMES CAN BE REDACTED), compensation and tenure with the organization. 

For the compensation model, generally, how are the main providers in the practice paid? Day rate? Salary? % of Collections?

You can download the Employee Census template and upload the filled-up document on upload button below

Describe a typical weekly staffing schedule at the practice, how many employees are working per day and their positions

OPERATIONS

OWNERSHIP

SERVICES

UTILIZATION, MARKETING, RECALL

Please use the paperclip icon at the bottom of each page to attach the required files.

FOR FINANCIALS:

Please upload your documents or email introduce me to your controller, bookkeeper or accountant and I will go through this with them, with your permission of course.

Please Attach the Following:

Please send the MONTHLY FINANCIALS for the last 3 years in Excel format. 

• Monthly Financial: TTM Profit & Loss (Required)
• Monthly Financial: TTM Balance Sheet (Recommended)
• Monthly Financial: General Ledger (Optional)
• Monthly Payroll: TTM Payroll Summary by Employee (Required)

IMPORTANT: Ensure that all reports covers the MONTHLY data for last 3 years and are provided in EXCEL format.

Asking Your Accountant? Here's what to say: "Could you please pull and send Excel versions of my profit and loss statement, balance sheet, and general ledger for the last 3 years?"

Excel Format is REQUIRED: Please upload the reports in Excel format. PDF format, especially for financial reports, will slow our team's analysis.

Examples of 12-Month Timelines:

• Full Calendar Year: 01/01/2022 - 12/31/2022
• Trailing Twelve Months (TTM): 02/01/2022 - 01/31/2023

Profit & Loss Statements

Please send the MONTHLY P&L for the year 2024, 2023 and 2022 in Excel format. 

These documents detail the yearly revenues and expenses of your practice. Please make sure these statements show a detailed break out of revenue and expenses. 

IMPORTANT: Ensure that all reports covers the MONTHLY data for last 3 years and are provided in EXCEL format.

Using QuickBooks Online? The following links provide help articles for pulling profit and loss reports from QuickBooks Online:

• How to Pull Profit and Loss Reports in QuickBooks Online
• How to Export to Excel in QuickBooks Online

Using QuickBooks Desktop? The following link provides help articles for pulling profit and loss reports from QuickBooks Desktop:

• QuickBooks Desktop Instructions

Using Sage or Another Accounting Software? If you use a different accounting software, please try to match the format as closely as possible.

Balance Sheet

Please send the MONTHLY BALANCE SHEET for the year 2024, 2023 and 2022 in Excel format. 

IMPORTANT: Ensure that all reports covers the MONTHLY data for last 3 years and are provided in EXCEL format.

The balance sheet provides a snapshot of your business's financial health by displaying its assets and liabilities. This includes key elements such as inventory, paid-in capital, loans, accumulated depreciation, and more.

To assist you in generating balance sheets, we have provided two helpful video tutorials. These tutorials cover the process of pulling balance sheets using QuickBooks Online and QuickBooks Desktop:

QuickBooks Online: Learn how to efficiently pull balance sheets in QuickBooks Online by following the steps in this detailed video.

QuickBooks Desktop: This video will guide you through the process of generating balance sheets using QuickBooks Desktop.

General Ledger

Please send the MONTHLY FINANCIALS for the year 2024, 2023 and 2022 in Excel format. 

The general ledger provides detailed insights into the individual transactions that constitute the revenue and expense accounts on the profit & loss statements. This level of detail helps us identify potential discretionary or one-time costs that can be added back to the value of your practice.

To ensure consistency, please pull a general ledger that matches the same time period as your profit & loss statement.

The following links offer help articles for pulling general ledgers from QuickBooks Online and Desktop:

Helpful Tips:

• In QuickBooks, the report you need is titled "Transaction Detail by Account," located in the "For My Accountant" section of the reports.
• Ensure the general ledger is grouped by account or income statement. This will align the general ledger with the charges and amounts shown on the profit & loss statement.

QuickBooks:

• Run a Transactions by Account Report in QuickBooks

If you use a different accounting software, please try to match the format as closely as possible.

IMPORTANT: Ensure that all reports covers the MONTHLY data for last 3 years and are provided in EXCEL format.

Please provide a detailed breakdown of any personal expenses / adjustments reported in the P&L for the latest trailing 12-month period, and 3 years (2024, 2023, and 2022)

Guide to Add-Backs

As you prepare to share your financials with us, we want to offer some guidelines that will help you maximize the appeal and accuracy of your business's valuation. By addressing these points, we can calculate a normalized EBITDA more quickly, positioning your practice for a successful sale.

Understanding EBITDA and Add-Backs

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a measure of your practice’s operating performance. Buyers use EBITDA to assess profitability because it focuses on the earnings generated solely from operations, excluding expenses that may vary significantly based on ownership or financing.

Add-Backs are adjustments made to EBITDA to account for unique, non-recurring, or discretionary expenses that don’t reflect the ongoing, operational profitability of the business. By identifying and adding back these expenses, we can showcase the true earning potential of your practice.

Below are key areas to consider when preparing your financials, allowing us to calculate a normalized EBITDA that accurately reflects your business’s profitability.

1. Owner Compensation Adjustments

If you are both the owner and a provider, your compensation may include both profit distributions and salary, which could be higher than typical employee pay. Normalizing your compensation helps buyers see a realistic profit view.

• What to Consider: Compensation above the market rate for your role as a provider could qualify as an add-back.
  • Example: If you receive $1M annually but the market rate for your production is $375K, then the difference ($625K) may be added back.
• What to Provide:
  • Payroll Information: Detailed payroll reports showing each individual’s compensation.
  • Monthly Income Statements: Financials broken down monthly for a thorough overview.
  • Format: All documents should be in Excel.

2. Identifying Non-Operational or Non-Recurring Expenses

Certain expenses that are unique to you as the owner or tied to one-time projects can distort the practice’s profitability. Adjusting these can provide a more accurate reflection of your business’s operational income.

• Examples of Potential Add-Backs:
  • Personal Pension Funding: Contributions specific to your retirement or pension plans.
  • Non-Business Travel: Travel expenses not directly related to the business.
  • Startup or Research Costs: Expenditures for ventures or initiatives that didn’t become part of the business, e.g., $50K in franchise research.
  • One-Time Projects: Examples include a $15K website redesign or consulting fees for special projects.
• Documentation: Please identify any such expenses, listing each item and providing details in Excel format.

3. Real Estate Adjustments

If you own the building where your business operates and pay rent through another entity you control, adjusting this rent to market rates helps standardize overhead costs in the financials.

• What to Consider: If you charge yourself below- or above-market rent, adjusting this cost to reflect fair market value could qualify as an add-back.
• What to Provide: Records of rental payments made between the practice and any property ownership entities.

4. Revenue Adjustments and Limitations

Generally, add-backs are most effective for adjusting specific costs or one-time expenses. Adjusting for lost revenue due to uncontrollable events, like weather disruptions, is generally not applicable.

By carefully identifying these areas, you will help us expedite the valuation process. The information you provide allows us to present your practice in the best light to potential buyers, highlighting its true profitability and growth potential.

Payroll Summary Report By Employee

Please send the MONTHLY PAYROLL SUMMARY for the year 2024, 2023 and 2022 in Excel format. 

The payroll summary report is essential for identifying the gross pay of both employees and the owner(s).

IMPORTANT: Accurately determining owner pay is crucial for the valuation of your practice, as it often represents one of the most significant monetary adjustments made.

Please run this report for the same time period as the Production by Provider and Profit & Loss reports mentioned earlier.

Excel Format Preferred: Whenever possible, please provide the reports in Excel format. This greatly facilitates our analysis.

The following links provide help articles for downloading payroll reports from the most common payroll software:

Payroll Software:

• ADP: ADP Payroll Report
• Paychex: How to Download Payroll Reports from Paychex

IMPORTANT: Ensure that all reports covers the MONTHLY data for last 3 years and are provided in EXCEL format.

This will help us ensure that we have a full picture of the operational data to complement the financials in the analysis.

• Revenue per patient - retention data (new vs old)
• Percentage of service mix

PMS Software:

URL:

User:

PW:

Complete the following fields to provide details about your current lease contract.

Upload all current copies of Business Insurance policies:

• Building Insurance
• Contents Insurance
• General Liability Insurance
• Workers Compensation Insurance
• Professional Liability Insurance
• * 5 Years Loss History from the current Insurance Agent (To show if there have been any claims incurred by the current owner.)

A detailed list of all physical and intangible assets owned by the practice, including medical equipment, office supplies, technology, and intellectual property. This should include a debt schedule specifying whether equipment is owned outright, leased-to-own, or under conventional financing arrangements.

Legal documents that were filed to form the business, including any required state or federal filings.

• Articles of Incorporation: A formal document filed with the state to legally establish the practice as a corporation, detailing the business's structure and purpose.
• FEIN Number: The Federal Employer Identification Number assigned to the practice by the IRS, used for tax and identification purposes.
• Operating Agreement (if applicable): A legal document outlining the management structure and operational procedures of the business, typically required for LLCs.

Contracts detailing the agreements between the practice and its medical providers, specifying duties, compensation, and terms of employment or partnership.

• Employment Contracts: Agreements between the practice and its employees, outlining job responsibilities, salary, benefits, and conditions of employment.

Documents that verify the qualifications, credentials, and professional licenses of medical providers working with the practice. These certifications ensure compliance with industry standards and regulations, confirming that providers are authorized to deliver medical services within their specific scope of practice.

Typical certification documents include:

• For Nurse Injectors:

  • Registered Nurse (RN) or Nurse Practitioner (NP) License (issued by the state nursing board)
  • Basic Life Support (BLS) & Advanced Cardiac Life Support (ACLS) Certification
  • Botox & Dermal Filler Certification (e.g., from AAFE or Allergan)
  • Laser & Energy-Based Device Certification (if required by state)
  • Bloodborne Pathogens Certification (OSHA compliance)

• For Aestheticians:

  • State-Issued Aesthetician License (from the state board of cosmetology)
  • Master Aesthetician License (if applicable, for advanced treatments)
  • Chemical Peel Certification
  • Microneedling Certification
  • Laser Technician Certification (if required by state)

Visuals and content showcasing the practice, including:

1. Owner Information: Include the owner's name, background, professional experience, and notable achievements.

2. Practice History: Describe the practice’s establishment date, key milestones, growth over time, and any significant changes.

3. Location Highlights: Detail what makes the practice location special, including neighborhood features, accessibility, and unique selling points.

4. Visuals: Upload high-quality images of the office space (reception, exam rooms, etc.), team members), and promotional materials (brochures, flyers, etc.).

• • Front door
  • Waiting Area
  • Front Desk/Reception
  • All Operatories / Exam Rooms / Treatment Rooms
  • Lab / Sterilization Areas
  • Any major specialty equipment
  • Staff Areas

Ensure all images are clear and descriptions are detailed.

This section is optional and helps our marketing team understand how you learned about our firm.