April 30, 2019

How and Why to Valuate the Hard Assets of Your Dental Practice

As part of the dental practice prospectus process, valuating your hard assets should be taken into account. In fact, the weighted value of hard assets can comprise 15% of the value of your dental practice. Here’s a breakdown of how and why to put a price tag on the hard assets of your dental practice.

Ownership structure

The price presented on a prospectus assumes a smooth transition of ownership, including letters of introduction to all active patients and/or referring sources, the seller’s best efforts in assisting in the transfer of the practice, and a noncompete agreement. These intangible assets are what will make or break a transition after it occurs.

Practice demographics

Another factor that is considered in the prospectus price includes the going concern value of the dental practice in the form of patient demographics, such as patient records, current location and telephone numbers assigned to the practice. The buyer will use this information when considering how or if the practice needs to grow.

Equipment inventory

Upgrading equipment, such as computers, office equipment and furnishings, and instruments and supplies, can help make the practice more attractive to potential buyers. While it needs to make financial sense to remodel before selling, having up-to-date dental equipment helps in the transition because the buyer won’t have to replace or upgrade items on day one.

What’s next?

Contact the experts at Professional Transition Strategies to learn more about how the current state of your hard assets affects the prospectus process.