Determining the Value of a Dental Practice

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While the passion of an entrepreneur may fuel a business, the numbers determine the efficiency and success of the business model. Knowing the value of your dental practice is vital if you are planning to sell the business, and understanding the valuation of your business is the first step to selling your dental practice.

The Value of Accuracy

The Internet has placed transparency on a higher plateau than ever before. With the emergence of high-speed Internet, search engines, forums, and social media, we have access to infinite data on endless subjects in seconds.

This ability to research topics so effortlessly has made accuracy and accountability in the marketplace mandatory. Prospective buyers are well-informed decision-makers who are capable of analyzing value on their own. There are no “opinion versus fact-based data” arguments these days that cannot be researched and challenged.

Defining a Dental Practice Valuation

The purpose of doing a dental practice valuation is to calculate an overall value of the business. The process involves a review of historical financial statements, such as the P/L, the cash flow statement, and the balance sheet. An evaluation reviews the cost of fixed assets, such as medical equipment, property value, and current assets, which includes cash-on-hand, accounts receivable, and inventory.

Accountant’s Eye Versus Industry-Specific Analysts

Dental practice valuation is a foundation upon which a smart, selling strategy is built. The analysis provides more than an accurately accessed value of the business.  It also generates an opportunity to objectively determine what could be done now to increase the value of the practice.  A year-to-year analysis of revenues and expenses could raise some points to ponder. Is enough money being spent on marketing to maximize sales? Is it time to redo the waiting and reception area? Would a better online presence get the business more exposure?

While a dental practice valuation is comparable to an analysis of a business operation performed by accountants, it is not the same as utilizing industry specialists. Accountants can crunch numbers and place a valuation on a practice, and a specialist can offer industry trends, business practices, and suggestions for valuation improvement.

Happy Buyer!… Happy Seller!

With the majority of American dental practices selling for less than 95% of the valuated purchase price, having an accurate dental practice valuation enables you to achieve your desired selling price.

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