When it comes to owning a dental practice, you want to have a working knowledge of how much most dental practices sell for. If you are looking into either selling or buying a dental practice, then you understand the investment you are making. However, you really want to know how much you can make in return for that investment. There are hundreds of items to consider when it comes to appraising a dental practice. Even so, four main elements impact the selling price the most: cash flow, gross income, location, and patient profile. Let’s take a look at these key elements and how they affect the value of dental practices.
One of the most significant items in determining the selling value of your dental practice is the annual cash flow produced. Buyers, accountants, credit officers at lending institutions, and dental consultants all look into cash flow more than any other valuable item. If a dental practice sees a significant influx of cash every year, then the sale price of the practice will increase significantly.
The annual gross income of a dental practice is the second major item looked at when determining the sale price. This is because the gross income indicates how busy the purchaser will be. Gross income indicates the number of days and hours that are required to produce these fees. The type of fee guide and treatments performed will influence gross income. They also push purchasers to ask questions about the practice modalities to understand the dentist and hygiene production figures.
No matter what business you are selling, the location always influences the final sale price. Practices located in areas that see a lot of daily traffic tend to have a larger cash flow and gross income. The location of the dental practice can significantly crank up the sale price because it directly affects the number of people exposed to your practice.
The term patient profile refers to the ability of a patient to understand and accept the treatment plan delivered by a dental office. Basically, it determines which dental practices have patients that completely follow through dental plans, including the payment options that go with them. It also determines which patients use insurance of some kind or pay out of pocket for dental care. You want a healthy balance of various patient profiles.
There are a lot of factors when it comes to determining the final sale price of a dental practice. Cash flow, gross income, location and patient profile are the four key elements that have a major effect on the value of a dental practice. When it comes to determining the sale price of a dental practice, check these factors first to help determine the perfect price point. This can help you get a better grasp on the real value of dental practices.