Practice Valuation

One of the most valuable assets you have is your dental practice… NDP can guide you as you look to value your practice.

NDP provides valuations for general and specialty dental practices nationwide. As you search for a potential buyer or court an already interested buyer, the valuation will be an important tool for you and the buyer to understand the financial value of your practice.

Having a thorough valuation (or financial analysis) is critical for you as the seller in presenting a well formulated plan for the transition of your practice.

NDP’s valuations are completed by a trained CVA and CPAs with extensive knowledge of the dental industry and our valuations go through a rigorous review process. The final valuation of your practice is provided in both hard copy and electronic report format, which can be shared with potential buyers and their advisors.  Most often, the valuation provides a good starting point for transition discussions and negotiations.

NDP will assign a market value to your practice based on the consideration of many variables. These include but are not limited to the following:

Our final valuation report includes an explanation of the history and key facts of the practice, an explanation of the valuation process and details on how the ultimate value of the practice was determined. In addition, the report includes as exhibits, a practice profile completed by you, the seller, the historical financials of the practice utilized in the valuation and a pro forma financial analysis showing the net cash flow to the potential buyer.

Although cash flow is critical, the value and condition of dental equipment can greatly influence the value of a practice. By way of example, a new start up practice that invests $600,000 in the finish out of a new location and has collections of $600,000 after year one may bring as much as $500,000 even though the net cash-flow after expenses is probably not yielding more than 30%.

On the other hand, a practice with outdated equipment but that is collecting $1,000,000 with an overhead of 30% (therefore the practice is netting 70%), may still bring in a value close to 70% of collections. This is because, the new buyer can take the $700,000 of new income and invest the needed $200,000 of upgrades and still net over $575,000 their first year.

On the flip side of the coin, it’s critical a seller not over invest in improvements to the office or equipment immediately prior to a valuation or potential sale – just like in real estate, certain investments can yield a greater return and ensuring smart investments are being made will yield benefits in the long run.

Contact us to discuss the potential value of your practice or the value of a practice you are considering and how NDP can assist.

Let NDP help find the right practice for you!

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