There comes a time in most dentist’s lives when they need to or should understand practice valuations whether they are selling a practice, buying a practice, or planning to exit the profession in the future.

Many of us have unrealistic expectations about how much our possessions are worth. Houses, cars and toys are examples of things we all know fall into this category. But, what about your practice?

There are many value drivers that contribute to the sale price of a dental practice. There is an uber focus on gross revenue as the main value driver. Regular readers of The Professional Advisory will remember that gross revenue, while important, is certainly not a good yardstick of a practice’s value, particularly when taken in isolation. One of the lesser discussed, but very important value drivers is the value of a Good Team.

We get this response from many dentists when discussing their practice and future plans. While it is a fact that you don’t need a valuation until you sell, there are many reasons that having a practice valuation that is regularly updated may prove to be a valuable part of your long term business planning. In addition, it may help to make your practice more valuable when you do decide to sell.

In our business as dental practice valuators, most of our practice valuations are for dentist’s who are not planning to sell their practices for at least five years, but want to make their practice more valuable for the future. We are constantly asked about whether or not the adoption of new equipment and or technology can increase the value of a practice.

Dental practices in general are growing. Dentists are taking more space and building bigger practices, buying neighbouring practices and merging them together, moving out of the “invisible” location and becoming more visible and accessible, extending hours and staying open on weekends. Why is this happening and what does it mean for dental practice values?

The demand for successful dental practices continues to grow and therefore the prices being obtained continue to rise. We believe that demand and accordingly, prices are at an all-time high. As a result of this phenomenon, we are frequently asked the following questions from our clients. Are we in a dental market bubble? What will happen to demand and prices over the next five to ten year period?