Selling a dental practice is a career milestone for any dentist. You may be retiring, moving to a new location, or seeking new opportunities, but no matter the reason, knowing the actual value of your practice is crucial to receive a good price. Valuing a dental practice may be a complicated process, but with proper guidance, such as working with a dental practice broker, and the right approach, you can confidently go through the process. The following are the best tips to help you properly value your dental practice prior to selling.

1.Learn the Major Valuation Techniques

There are some popular techniques adopted for valuing dental practices. It will be good to know the following:

Asset-Based Valuation: In this technique, the value is computed based on tangible and intangible assets of the practice, e.g., equipment, supplies, and goodwill.

Income-Based Valuation: It considers your practice’s profitability by reviewing net income and applying a multiplier to arrive at an approximate value.

Market-Based Valuation: This looks at your practice compared to recently sold similar practices in your region, taking into account size, location, and revenue.

A majority of buyers and brokers will use some combination of these techniques to determine a fair market value.

2.Get Your Financial Records in Order and in Review

Sound financial records are essential to valuation. Brokers and buyers will want to look at at least the last 3 years of financial reports, including:

Profit and Loss statements.

Tax returns.

Balance sheets.

Accounts receivable and payable.

Patient records and appointment schedules.

Good quality, well-organized, and transparent financial records will establish confidence and justify your asking price.

3.Think About Your Practice’s Location and Market Demand

The worth of your practice is heavily determined by its location and the local market. Population growth, competition, and demographics affect the desirability of your practice to a buyer. A practice in a suburb with an increasing population and few competitors will fetch a higher price than a saturated urban practice.

4.Assess Your Patient Base and Revenue Stability

An engaged and loyal patient base is one of the most precious assets of your practice. Purchasers desire confidence that revenue will continue after the sale. Emphasize statistics like:

• Number of active patients.

• Patient retention percentages.

• Case acceptance percentages.

• Revenue patterns over time.

Level or increasing revenue streams enhance the perceived value of your practice.

5.Evaluate Your Equipment and Technology

New, well-preserved equipment and current technology can greatly increase the value of your practice. Purchasers tend to pay a premium for digital imaging, electronic health records, and effective office management systems within practices. Conversely, old or poorly preserved equipment could lower the price.

6.Consider Your Staff and Their Experience

Well-trained, experienced personnel bring value through uninterrupted, smooth-running operations after the sale. Purchasers seek an integrated team that will continue to deliver quality care without significant disruption. If your personnel is willing to remain post-sale, that may be a major plus.

7.Take into account Goodwill and Reputation of the Brand

Goodwill is the intangible asset built up by your practice’s reputation, patient relationships, and community presence. Online reviews, word-of-mouth referrals, and long-term patient loyalty all contribute to goodwill. Retaining and displaying this can make your practice more attractive.

8.Hire an Experienced Dental Practice Broker

A good dental practice broker is well-versed in practice valuation and practice marketing. A broker has access to market information, potential buyer networks, and negotiation skills. Using a broker will assist you in getting a realistic offer and the best sale conditions.

9.Be Realistic and Patient

It is only human to wish to get the best sale price for your practice, but overpricing may scare off serious buyers and drag on the sale process. Be ready to accept offers less than your desired amount and negotiate skillfully. Patience and adaptability typically yield a successful sale.

Conclusion

Valuing your dental practice before selling involves more than just numbers—it’s about understanding the unique qualities that make it attractive to buyers. You’ll be well-positioned to achieve a fair and profitable sale by organizing your financials, evaluating key practice components, and seeking professional guidance. If you want to sell your dental practice or explore dental practices for sale, hiring a specialized dental practice broker can be a turning point. They will identify your practice’s value and take you through each step of selling it.