What’s Your Practice Worth?

This is another popular question that naturally you would like to know prior to initiating a discussion with any potential buyer. For this reason we’ve developed a Dental Practice Valuation Calculator in order to provide you an approximate value of your dental practice. The value is based on the accuracy of the information that you provide and is used primarily for practices with annual revenues between $600,000 – to – $1.5 Million. If/when your practice exceeds $1.5MM, the value is typically greater than the calculation presented. NOTE: We also offer CPA-Certified Practice Valuations – (also Free-of-Charge) contact us if you have needs for a more comprehensive and more credible Practice Valuation Documents.

It is important to mention, there are several popular Valuation Formulas used by Accountants and Brokerage Firms in different industries, including dentistry. And they will tell you about the various methods or formulas involved which may include; “Percentage of Gross Collections,” “Multiplier of Net Income,” “Capitalization of Excess Earnings,” and/or the highly complex “Discounted Present Value of Perpetuity Formula”. And, while all that may have merit, we would prefer to use a present-day, Real-World Valuation Approach. In essence; the true value of anything is determined by what a ready, willing, and able buyer will pay for something in the marketplace.

Our Dental Practice Valuation Calculator has been programmed based on our experience working with many Buyers in Today’s Dental Market.

Ways to Increase the Value of Your Dental Practice

Based on many conversations with many different Buyers throughout the country, here below are some simple suggestions to increase the price a Buyer would be willing to pay for your practice. A custom report provided with KPI’s – Key Performance Indicators of your practice is available (also Free-of-Charge) as an option once you’ve completed the Dental Practice Valuation Calculator .

  1. Increase the EBITDA of the Practice: Each dollar of profit has a potential value of 3-5 x’s…maybe more. Avoid putting personal expenses on the company tab, i.e. Vacations, Car Payments, Hotels & Meals, etc.
  2. Increase the Annual Revenue of the Practice: Work harder to Market the Practice and Increase the Number of Patients seen per month in order to demonstrate that there is room for growth in the practice.
  3. Expand the Office Hours: Opening the Office earlier or later on certain days of the week and on a Saturday every other week will also Increase Patient Visits, Practice Revenues and provide an increase in the Practice Value.
  4. Increase the Number of Operatories: If/where possible, when the practice has less than five (5) Operatories, identify a way to expand this number and it will often result in a higher offer price.
  5. Decrease your Medicare/Medicaid: If/when the practice has over 5% in Medicare/Medicaid receivables, this will often have a negative effect of what a Buyer is willing to pay for your Dental Practice.
  6. Reduce or Eliminate Bad Debt: Removing any bad dept from your receivables will strengthen your balance sheet especially if you are able to collect all or a portion of this debt. No bad-debt is good, but a low percentage 3-5% is acceptable and this should not have an ill effect on your practice value.

What to Expect from a Dental Broker

There are different characteristics and offerings from Dental Brokers and Dental Consultants. Some are very qualified and know their surrounding market, others – not so much.

One of the most common aspects of the Dental Broker Business Model that you should be aware of is how they are paid. Like a Real Estate Agent, the Dental Broker receives a commission from you based on the sale price of your practice – typically a 10% commission is considered ‘Standard’. Many times we offer introductions to a qualified buyer at no cost. However, if/when we introduce you to a broker within our professional network, it is because your practice doesn’t fit the qualification requirements of one of our buyers and/or we believe that the broker will provide you the level of additional insight and/or service you may require. And, be assured that the dental broker we introduce you to, are Very Qualified, Very Experienced and probably some of the Best in the Dental Market.

From our experience with working with qualified dental brokers within our industry, we have found these Three (3) Critical Characteristics;

1) They will typically Negotiate a Higher Price For Your Dental Practice- many times over 10% Higher – thus paying for themselves.

2) They Manage All Aspects of the Transaction so that you don’t need to figure-out the many details or requirements to complete the closing.

3) They are keenly aware of your practice details and the many other Local practices in your immediate area. They know the Local Buyers and who will pay more for your practice. They also know your Local Competition and what they are selling for, and they use all of this information to your advantage during their negotiations.

Some Dental Brokers or Practice Consultants will offer you a Practice Valuation that could cost upwards of $3,000.00 – $5,000.00. If you decide to proceed with this, be sure to confirmed that the Valuation is CPA-Certified and, also request that the up-front cost of the Valuation be deducted from their commission when they sell your practice.

Once you answer the Dental Practice Transition Questionnaire we will Connect you to a very Qualified & Interested Buyer or with a Qualified Management Firm or Dental Broker if we don’t have a buyer for your practice.