Pediatric

What Makes Transitioning a Pediatric Practice Unique?

Evolving a solo pediatric dental practice into a partnership is the most common type of practice transition of all of the specialties.

Though pediatric practice transitions are common, pediatric dentists can be difficult to recruit due to ample competition from other practices in addition to the fact that starting one’s own practice as a pediatric dentist can be simpler than other specialties.

A pediatric practice transition is unique due to the following:

Pediatric Practice Valuations

Many owners assume the valuation is simply a percentage of their annual collections or a multiple of their profit; this simply isn’t true! Your valuation includes several more elements of which you should be aware:

Interested in understanding how to plan for a pediatric transition? Want to know what your practice may be worth in today’s market?

For a complimentary review of your practice, please contact our office, or fill out a short contact form. To get started, we request basic financial and operational information and set up a one-hour review of your practice to give you real expectations of what you can expect as a seller, and what buyers are expecting from you!

*Source: CWA Pediatric Comparison Report

 

 

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.
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