What Is the Value of Your Dental Practice?

In an article for DentistryIQ, Professional Transition Strategies Founder and CEO Kyle Francis says “it’s surprising that many dentists don’t even know the value of their practices.” As your most valuable asset, your dental practice is worthy of the time and investment to seek an appraisal. Here’s what to consider.

Keep your options open

“Retirement and career planning are the two main reasons dentists need to know the value of their practices,” Francis says. This gives practice owners the opportunity to leverage the values they’ve created to get a bigger payday with enough time to work with current or future dental partners to make necessary improvements over the course of time. In the long term, they can build value in a number of other ways, including an equity relationship with a dental service organization, which can take up to seven years.

Factors affecting practice value

An appraisal is really the only way to assess the true value of your dental practice since they are performed on a case-by-case basis. Practice type, location, practice visibility within the community, regional growth, standalone building versus retail center, and even signage all contribute to the overall value of your dental practice. Other factors include revenue trends and forecasts, the number of active patients, patient attrition and retention rates, and new patients in the last month and year, as well as value of the dental equipment and its resale rate.

Assessment and documentation

Getting a dental practice appraisal is no small task on the part of the owner but well worth it in the end. It will require three years of profit and loss statements and tax returns, current balance sheet, production broken down by provider and procedure type, active patient roster and list of employees (with wage or salary information), new patients during the past 12 months, accounts receivable aging report, copy of lease (if applicable), dentist biography, photo documentation of office and equipment, office hours, and insurance plans accepted. “The sooner you know how much your practice is worth, the earlier you can start enhancing its value,” Francis says.

What’s next?

Contact the experts at Professional Transition Strategies to start the process of appraising your dental practice, whether you plan to sell, retire, or practice for 20 more years.