As a former Healthcare Banker and current Director of Acquisitions with DecisionOne Dental Partners, the most common question I am asked by dentists is “What is my practice worth?” Even though this question comes up often, the answer is not always as simple as "take X% of last year’s collections."
Many approaches can be taken to determine a practice value. The most simple is taking an average of collections over a 3 year period. While we don't have the exact number, we do know that a high percent of privately owned dental offices sell for 60-80% of last year’s collections. An easy example would be a $1 million office would be worth $700,000 if you used 70% of collections to determine value. This formula is very limited in its scope and does not take into account many important factors such as cash flow, equipment age, number of patients, payer mix, and facility makeup. Adjustments need to be made to a practice’s value to account for all these factors.
At DecisionOne Dental, we know all practices are not the same. Each one has unique characteristics that provide value to its patients. Before jumping into the numbers, I speak with Dentists to find out what characteristics make their practice unique so they can get the most out of their valuation. I’d love to meet with you to hear about Your Practice’s Uniqueness. Call or Private Message me to set up a Free and Confidential Practice Evaluation. My cell phone is (708) 465-1908. I look forward to hearing from you!
This article was originally published on Linkedin.