Selling Dental Practice | Price Evaluation

selling dental practiceAfter careful consideration, you’ve finally decided that it’s the right time for selling dental practice. You know that selling dental practice is a process, and you’re ready to take the first step.

Where to Begin

Of course, one of your first questions is how you will be compensated for all of the hard work that went into building up your practice. You want to know how much your practice is worth. You also are interested in your ROI. Before marketing your dental practice, you need to come up with a fair valuation, which you can use as a starting point for selling dental practice.

As our associates at Menlo Dental Transitions can tell you, there is no one specific way to determine the exact value of your practice. The many factors going into the evaluation are subjective. There are, however, methods that usually work for most practices. Our team at Menlo Dental Transitions is experienced in the various evaluation techniques and can help you choose the best route.

Making an Accurate Assessment

When starting the process of determining a fair market value when selling dental practice, a list of assets is required.  While this does not give a complete picture of the profitability of a practice, it is one of the key pieces of information. The valuation can be based on the book value of an asset, its original cost or its current appraised value. A more conclusive method of putting a price tag on selling dental practice is doing a market comparison. Together with your marketing professional from Menlo Dental Transitions, you will want to identify similar dental practices that sold. Then, according to a system of ratios, you can come up with a ballpark selling price. The ratios involved in this method include ratios of sales price to annual net profits, discretionary cash flow and annual revenues.

This type of valuation does not take into account any unique features of your practice, however. The third type of valuation is based on income, which might be the most relevant. This puts a figure on predicted future cash flow and earnings evaluations. Based on real life figures, this method offers a price that a buyer might be willing to pay for your dental practice based on the particulars of the practice, including income, expense and how much the buyer can earn. This method is popular since it shows an actual revenue stream.

Choosing the Right Partner

Whatever method you choose, you can depend on Menlo Dental Transitions to help you get the best price when selling dental practice. Contact us directly here with any questions or to get started with the selling dental practice process. We will work with you to help you get the best ROI possible.