Valuing a dental practice is a tricky business. If you’re looking to sell your practice in the next year, getting an accurate valuation should be your top priority. The right dental practice appraisal formula sets you up to sell your practice for the best price possible. However, the wrong appraisal will leave you negotiating in the dark. Follow these three keys to success, and ensure that your dental office appraisal goes smoothly.
1. Find an accountant with dental experience
A dental practice appraisal formula alone won’t deliver an accurate result. There are many formulas and methods that can be used for dental appraisal. Which one will be more accurate depends on a variety of factors. For the maximum success, you should find an account experienced with valuing a dental practice. Experience working with dental practices and finding out how they run is essential. Dental practices are a complicated business operation. A practice that may not look as strong to an inexperienced eye may be thriving.
It’s important to keep in mind that even the best dental practice appraisal formula is not a crystal ball. The market could change from year to year. Even if you leave a thriving practice, poor management could run it into the ground. With appraisals already striving to reduce risk as much as possible, finding experienced accountants to do the valuation is key.
2. Keep all your information up to date at all times
This is great advice for any time you’re running a business. All of your information should be easy to access and simple to verify. You should already be compiling monthly, quarterly, or yearly reports on your collected funds, for example. You should have meticulous records of patient flow, cash brought in versus bills sent out, and your patient retention rates. Having all this information in one place will make it easier for the accountant to get a grasp of multi-year trends. Plus, it’s good to have all this information in one place in case you need it for tax reasons, for example. The more orderly your filing, the better off your practice is in general.
3. Don’t wait for a last second valuation
If you’re wondering how to value a dental practice, chances are you’re not ready to sell just yet. Most people make a five or ten-year plan before they’re ready to retire. If you think you’re going to want to sell within the year, get a valuation ASAP. You don’t want to be blindsided by a lower figure than you expect. If you’re planning to retire in five years, have a valuation now. Use it to find ways to increase the value of your practice. When you’re ready to retire, that money will be there for you.
Valuing a dental practice is easy when you put your ducks in a row. Keep meticulous records, and make them available to qualified accountants. Dental practices are like no other business out there. If you can get an account experienced with dental valuations to take care of the paperwork. Lastly, get a valuation early and often as you head towards retirement.
The staff at Premiere Practice Transitions are here to help guide you through this process.