Cliff's Notes

The Business of Dentistry

So, Someday You Want to Sell Your Dental Practice? Guess Again!

Cliff’s Notes for October 25, 2015

Cliff Marsh, Henry Schein ……Cell: 201-321-7494……Fax: 201-262-2210

E-mail: cliff.marsh@henryschein.com

http://www.cliffsnotesblog.me

http://www.youtube.com/cliffmarsh100

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Nice, neat, clean, what more could your patients want. 35 years of quality care with a solid patient base that grosses $750k with a 50% overhead and a low write-off rate. You have good practice management software and digital radiography. You got it all, a great package.

old dental office

You spoke with your financial advisor and the value of you practice is part of your estate planning. By the way, who officially evaluates a dental practice? How do you evaluate a dental practice? Anyway, that $750k practice should be worth about $650k when the time comes, maybe in 3-5 years. Then again, maybe not!

It was announced this week that The American College of Prosthodontics Education Foundation is developing a Digital Dentistry Curriculum. The press release should be out in several days (http://www.gotoapro.org/media/). So what does that mean to you? Let’s do the math. There is a bright and talented young dentist that came out of a great residency program and has been honing their skills in a fast pace environment. They are married with a child and owe about $200k in student loans and they won’t buy your practice. Outside of not having $650k, they practice a different kind of dentistry. The investment required for them to up-grade your facility to accommodate the way they learned to do dentistry and compete in the market adds another $200k. They need digital and high-tech diagnostics to increase production. So now your $650k piece of equity (before taxes) is now worth about $400k, maybe. Remember, every dental transition looses as much as 30% of the patient base and buyers know that.

You need to modernize your practice just like you would your house before you sell it. However, in this case the investment in modernizing will bring increased revenue and increase the value of the practice. If you could make an investment of $6k-$12k and realize a $30k return in 12 months, would you do it? A $30k investment in a dental practice looking to transition in 3-5 years should yield an additional $150k in value.

At the very least, you need to position your practice to become digital and chartless. You need an internet presence and a patient re-care communication system. Your network and intranet need to be current (Win-7 or better) and secure and you need a plan for future technology integration. So many times I hear a seller say “look at the potential” well, nobody pays for potential. They pay for what was and what is.

Positioning your practice for up-grades is a major selling feature. The side effect is that it will improve your current operation and the costs may be very nominal.

When you are ready to start planning a transition, think about who and what the buyer will be and feel free to contact me at any time with any questions or concerns.

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October 27, 2015 - Posted by | Uncategorized

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