Transition Your Endodontist Practice

With only 65 Endodontic programs in the country producing about 4,500 graduates each year, the endodontist resident is in high demand. These graduates are equipped to produce immediately and therefore, good candidates for purchasing an existing practice. Our trusted relationships with dental schools and residency programs across the country means NDP can quickly locate ideal candidates for a transition. Whether you’re looking to hire an associate to partner or locate an immediate potential buyer, we will personalize a plan that’s right for your transition. Read our key factors for consideration:

  • Endodontic residents are in high demand: There are only 65 dental schools graduating approximately 4,500 dental students each year.
  • The Ideal Candidate: We have found the model candidate to be someone with a few years of experience and the drive to become a business owner sooner than later.
  • Equipment matters: The majority of new buyers have trained with the latest and greatest technology so the newer your equipment, the more valuable your practice. Equipment upgraded in the past 5-7 years may be an added value.
  • Limited physical assets may entice new buyers: Typically, a two-chair, 1,200 square foot practice, updated microscope and digital office is sufficient for a one-doctor Endodontic practice.
  • Expectations of candidates: While a general dentist will need time to contribute $50,000 of monthly production, the Endo resident is capable of generating this type of production immediately.
  • Buy-in from referring doctors is key: If referring dentists and the current office team support the new doctor, the transition will run smoothly.

Overhead is the operating expenses of the practice. Typically, this will be the total expense of the practice minus any of the following expenses:

  • Owner Doctor’s & Associates Salary (including applicable payroll taxes)
  • Financing Costs (Interest Expense, if applicable)
  • Non- Cash Charges (Amortization, Depreciation)
  • Owner Discretionary Expenses – Travel, Continuing Education, Automobile Expense, Cell Phones, etc.)
  • Excess or additional rent if owner also owns building and are paying themselves a rent above or below the market rate
  • Retirement or Pension Expense

Whatever is left divided by the collections of the practice will equal the overhead rate of the practice. This typically falls between 30-60% in dentistry, the lower the percentage, the better.

Assets are the items in your practice that help you generate your cash flow such as supplies, equipment and the furniture and fixtures of your office.

  • Supplies: To understand the value of your supplies, we aren’t asking you to count gauze pads or gloves, we will typically take two months of your normal supply expense to estimate the value of the supplies you have on hand. This will vary by specialty – but typically Oral Surgeons or Periodontists who work with implants will have higher supply expenses due to implant or bone grafting costs.
  • Furniture and Fixtures: You will want the estimated value of the assets that are not dental related (waiting rooms chairs, break room, decorative pieces that will stay in the practice, etc.) to be accounted for in the final estimate of asset value. This can be as detailed as a piece-by-piece inventory or estimated by room.
  • Oral Surgery Equipment: Generally in a valuation of your practice, a third party will be required to come in and provide you an independent third party appraisal of your equipment value. Alternatively, if you have the original invoices of the equipment of your practice, we can use these as a basis for an estimate of value. X-ray units, dental chairs, cabinetry, sterilization equipment, Lasers, Intra-Oral Cameras and computer systems and other similar equipment will be included here.

Endodontic Practice Valuations

Endodontic practices are valued similar to other dental practices, and cash flow is a pertinent factor. Location, equipment, finish out, staff and the senior doctor’s involvement in transition are other major components. An Endodontic practice can have the lowest overhead in the industry, and if staff and operating costs are controlled the practice will have an increased valuation.

  • Overhead – It’s rate to see overhead rates outside of the 30-55% range, but some practices can maintain an overhead as low as 25% resulting in an increased valuation. Doctor efficiency and staff salaries affect overhead the most.
  • Assets – Because assets are key to an Endodontic buyer, the detail and accuracy of the equipment appraisals will be crucial. Investment in new technology increases the value of the practice almost dollar for dollars
  • Location – A practice on the west coast may value at a premium compared to a rural southeast or Midwest practice.

While valuations are complex with multiple variables, especially those of referral-based businesses like an Endodontic practice, NDP’s valuation of your practice will apply industry standards while taking into account the unique factors that make your business yours. Read more about our valuation services here. Interested in potentially transitioning your Endodontic practice or just want an idea of what your practice may transition look like as you begin thinking of the next phase? Contact us for a complimentary review of your practice, or fill out a short contact form and we will contact you. Once we hear from you, we will request some basic financial and operational information and set up a one-hour review of your practice to give you real expectations of what to expect, and most importantly, what buyers are expecting from you!

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