practice transition
10 strategies for adding value and
GETTING
TOP
DOLLAR
by Jeremy Brown, J.D.
The most common question dentists (both buyers and sellers) ask our
firm is “How much is this/my practice worth?” There are plenty of
“experts” who will freely share their opinion online or in study groups
about how to value a dental practice. Practices are not worth a price-
to-gross ratio, CAP rate, or multiplier. A dental practice is worth as
much as a buyer is willing to spend to purchase that practice.
Buyers, and in turn their lenders, examine several factors when pur-
chasing a dental practice. As an owner, consider the following factors
to increase both demand and perceived value in your practice.
1
Maintain your production.
Often practice owners will
start to slow down before ac-
tual retirement. Before reduc-
ing your schedule or referring out
procedures once provided in the prac-
tice, consider the effects on your bottom
line. If the need arises, consider the al-
ternative of bringing in a specialist or
hiring a part-time associate.
Get your fees in line. Fees
should be evaluated and ad-
justed annually. Several re-
sources are available to report
treatment fees by percentile
for a given zip code. Keeping your fees
competitive can add practice value if
instituted soon enough.
2
3
20 HOUSTON DENTISTRY | www.houstondentistrymagazine.com
Keep new patient numbers
up. After examining annual
gross collections, buyers focus
on the number of active pa-
tients and new patients in the
practice. Having a steady stream of new
patients is an indication of practice vital-
ity and growth. Invest time and re-
sources to advertise and network in the
community. Consider opening a free so-
cial media account (i.e. Facebook, Insta-
gram) and asking satisfied patients to
leave a “5-star” review online (i.e.,
Google) for your practice.