How Much is a Dental Practice Worth?

A dental practice is an excellent investment for anyone looking for a stable and lucrative business. Not only do dental procedures provide an essential service, but they also tend to be very recession-proof. In challenging economic times, people may cut back on unnecessary expenses, but dental care is often considered necessary. As a result, dental practices often continue to thrive even when other businesses are struggling. But how do you calculate the approximate worth of your dental practice? Here's a guide that can help you figure out your calculations.

Factors to consider while valuing your dental practice

Following are some of the factors that you should keep in mind while making up a comprehensive valuation:

● Total number of active patients

● Gross income

● Net income

● Number of new patients that have come to your clinic in a month

● The area demographics of your patients 

● Specialties and procedures performed in-house

● Your practice's goodwill

● Market issues

● Type of insurance accepted in your city, such as HMO, PPO, or Medicaid insurance participation

Importance of dental practice appraisal

You may wonder whether going for a dental practice appraisal is vital. The answer is yes. Following are a few instances when accurate dental assessments are essential:

● Buying a dental practice

● Selling a dental practice

● Navigating a merger

● Hiring dental associates

● Entering into litigation

● Taking on a partner

● Securing a letter of instruction

● Estate planning

Calculating your dental practice worth

Here are two ways to calculate the value of your dental practice worth. 

● Your dental practice worth = 70% of its gross revenue

● Your dental practice worth = one times of your net income

However, you should know that these methods may not provide an accurate value. You must consider several variables, such as the total number of active patients, their demographics, type of insurance, market issues, and the number of new patients who come to your clinic in a month. Therefore, if you think your dental practice is worth $400,000, it might be worth $280,000 after the appraisal. Consequently, it is always better to work with a dental broker to determine the actual value of your dental practice.

Working with a dental broker

When it comes to dental practice valuations, accuracy is vital. A small error can mean the difference between a quick sale and a prolonged marketing campaign. That's why working with a trusted dental broker is so essential. Dental brokers have the experience and knowledge to evaluate your practice accurately. They will consider various aspects, including the size of your practice, location, and current market conditions. In addition, they will work with you to obtain the most up-to-date information about your practice, ensuring that their report is as accurate as possible. 

A dental practice is a valuable investment that can provide patients with quality oral care for many years. By understanding the value of a dental practice and taking steps to protect that value, you can ensure your patients receive high-quality care now and in the future.