Many dentists who are considering selling their practice think that they can handle the valuation process themselves. They may have managed a large transaction successfully—the sale of a house, for instance—and assume that the process is similar. But selling a practice is far more complicated than selling a house.
To maximize profit, you must be familiar with the valuation methods used, understand how your objectives (immediate retirement or not) affect the transaction, and recognize the imperative need for specialized accountants and brokers. Overlooking any of these factors or being unaware of available strategies can cost you money. Here’s what every dentist should know about valuing a practice.
The bottom line? Selling your practice is probably the largest financial transaction you’ll ever make. In addition to getting the most out of the business you’ve built, with a professional on your side you’ll get advice on the strategy that will best help you achieve your objectives. If you go it alone or work with someone who doesn’t have the breadth of knowledge you need, you’re less likely to realize the maximum profit.
Start by understanding the factors at play and make sure you obtain professional advice. Even if selling isn’t on your radar, get an appraisal from a broker who specializes in dental practices. They can tell you what aspects of the practice, if any, can be improved to increase its value. Once you know how much your practice is worth and the long- and short-term factors that would affect its sale, you’ll be able to make an informed decision about your exit strategy and the timing of your sale.