General

General Dentistry

Transitioning a General Dentistry practice requires the consideration of many factors and an understanding that each general dentistry office is unique. NDP has the tools to ensure your transition success.

There are currently 65 dental schools in the United States and over 100 advanced training programs like a GPR or AEGD in the country. These general programs and general residency programs are producing approximately 5,000 students and graduating residents each year. The vast majority of this pool of candidates will either work in a corporate setting, join the military, specialize, or work in a group practice. There is a small percentage of dental school classes that we poll who have committed plans to join a private practice upon graduation. The candidate pool that is most attractive to our clients are the candidates that have a few years of experience, have a drive for success, know that they don’t want to work in a corporate setting and have the passion to become a business owner sooner rather than later.

Through our network of relationships within the dental schools across the country, NDP has contacts and access with most of the dental schools, AEGD, and GPR programs. We have relationships with countless vendors and practice management consultants enabling a faster match of potential buyers to a potential seller, thereby taking the first step towards a successful transition.

Whether looking to add an associate or looking for a potential buyer, here are some keys to consider:

General Dentistry Practice Valuations

General dentistry practices are valued similar to the other practices in dentistry. Number one is the cash flow of the practice. Cash is king! Location, type of equipment and finish out, type of patients, type of transition if the senior doctor is staying there to transition the patients and staff to the new doctor are the major components. A General Practice has the ability to have a low overhead if ran efficiency, so if staff and operating costs are controlled, profit margins and cash flow increase resulting in an increased valuation.

What is Overhead?

While it’s rare to see a general practice with overhead rates outside of the 50-70% range, we have seen general practices maintain an overhead as low as 45-50% and obviously these practices will value higher than one with an overhead rate above 70%.

What about the Assets?

Similar to other specialties, the valuation of a general practice will often times vary due to the level and value of assets. Because assets are key to a potential general practice buyer, the detail and accuracy of the appraisals of equipment and any potential upgrades in the immediate years prior to transition will be crucial to the selling doctor. A practice that has just invested in a 2014 Carestream x-ray valued at $125,000 can increase the value of the practice almost dollar for dollar.

If cash is king then location is queen – generally location of a practice will set the demand. A practice on the west coast, west of Interstate 5 may value at a premium compared to a rural southeast or mid-west practice. This is for the obvious reasons, but also because, while not a universal rule, most general dentists are married and it takes two decision makers versus one to make the commitment or move to a certain climate or city.

With regards to the value of a general practice there are some high level expectations, but in general, general practices have valued in the 70% of collections range for decades. Obviously, valuations are complex and there are several factors that can cause the resulting value to vary. NDP’s valuation of your general practice will use the industry standards present in the valuation world while taking into account the factors that make your business unique. Read more about our valuation services here.

Interested in potentially transitioning your general practice or just want an idea of what your practice may transition look like as you begin thinking of the next phase?

For a complimentary review of your practice please contact our offices, 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 you as an Oral Surgeon seller can expect, but most importantly, what Oral Surgery buyers are expecting from you!

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.
Let NDP help find the right practice for you!

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