How to Know My Dental Practice Value

dental practice chairs

How To Know My Dental Practice Value

Understanding the value of your dental practice can be an asset, regardless of whether or not you are in the process of selling your practice. At Professional Transition Strategies, we understand that selling or merging a dental practice is an intricate process, and we are here to guide you through it. The first step is understanding and maximizing the value of your practice. Here’s how:

Why Should I Know The Value Of My Practice?

It is important to establish the value of your dental or medical practice for a variety of reasons, including if you are:

  • Considering selling your practice
  • Needing a second-opinion appraisal
  • Bringing an associate or partner into your business
  • Planning for retirement or estate planning
  • Determining personal net worth
  • Planning prior to marriage; prenuptial agreements
  • Allowing for fair disposition of assets for estate or disability purposes
  • Establishing a baseline for future business endeavors

How To Value Your Practice:

There are many details that go into determining the value of your dental or medical practice, but a good place to start is to have a comprehensive Practice Appraisal conducted. This not only helps you understand the value of your current practice, but helps you to determine ways to make your practice more profitable and valuable. At Professional Transition Strategies, we use the most effective method of calculating your practice’s worth by looking at both attributes and challenges and how they have impacted the success of the practice.

If you are looking for a quick estimate of the value of your practice, our valuation calculator is a great place to start. This tool allows you to see an online estimate of the value of your practice with simple information.

What Factors Affect The Value Of Your Practice?

There are many different factors that affect the value of your practice. Some of the factors we look at to determine the value of your practice include:

  • The practice’s location, visibility and population of city or town
  • Type of medicine or dentistry, revenue sources, active patient base
  • Growth potential
  • Patient attraction and retention rates
  • Reason for sale of practice
  • Projected patient and revenue retention after the sale
  • Condition and age of medical and dental equipment based on wear and tear as well as technical advancement
  • Office décor and condition
  • Long term trends of the practice’s revenue and profit margin

Should l sell?

Every doctor that owns a practice should eventually plan to sell. With proper planning and assistance many will get paid well for their life’s work. Others will miss opportunities because of fear or misinformation, and net only a fraction of the worth of the practice. Waiting until you absolutely need to sell your practice because of financial reasons or life events can put you in a rush, which typically doesn’t result in the best value for your practice. Consider selling your practice before you need to, so that you don’t walk away from a valuable asset.

Why can’t I wait a few more years to think about selling?

None of us can be sure we have a few more years to practice at our current level. It is important to sell before your practice declines in net income, patients or revenue as that is a red flag to buyers and financial institutions, and could negatively affect the selling price of your practice. Selling out of necessity takes you out of the driver’s seat. The best time to sell is when things are going well. No one wants to buy a practice that is on the decline.

What Can I Do To Prepare To Sell?

Taking the time to get your practice and facility in the best financial and operational shape possible will be extremely beneficial when and if you decide to sell. Since it is a buyer’s market, only the best practices will sell, and the great ones will sell at a premium.

Regardless of where you are at in the process of selling your practice, we are here to help. You can learn more about us and the process on our website or reach out to us at any time.