Three Dental Practice Valuation Types

Dental Practice Valuation and medical practice valuation are two of the most “Googled” terms in the practice transition space. 

When someone is searching for dental practice valuation, they’re often looking for either 

While your goals as a seller ultimately determine what you need to get a valuation, either CPAs or dental practice transitions brokers can evaluate a practice. 

Practice Transitions Group has a couple valuation offerings for dentists at each stage of the transition process. 

A Practice Valuation Calculator

(Ours is here)

Who it’s for: Casual Seller

What you need:  High level financials, like: 

  • Approximate yearly revenue
  • Revenue trend (is your business growing or declining?)
  • Percent of hygiene

How it works:  With our practice valuation calculator, you can get a ballpark valuation, or price, for your practice.  Remember, this is an estimate based , but the range offers clarity to doctors beginning to explore selling their practice or partnering with an operator.  

What happens next:  After a dentist submits high level information through the dental practice valuation calculator,  the results are emailed directly to their inbox.  A broker will follow up in case the dentist is interested in learning about next steps.  Practice Transitions Group tends to leave the conversation in the dentists’ hands at this point.  Oftentimes dentists will just be interested in the number but less serious about taking next steps. 

A "First Look"

Who it’s for: Curious Seller, Open to feedback

What you need:  12 months of financials, payroll reports, and a couple EMR/Practice Software reports

How it works: During a first look, you submit one year of financials, payroll reports, and production reports.  Our underwriting team, including a former practice manager and CPA, runs the reports a through an expedited, higher-level underwriting process. 

After digging into this year of reports, a lead broker offers a general appraised value of the practice.  In addition, the broker makes a custom action plan with action steps you can take to improve your practice's value and marketability. 

Oftentimes, dentists want the highest price they can earn.  With our custom action plan, dentists have the choice to work on their practice in specific ways that we have found actually get them the most bang for their buck (vs what one might assume, like new equipment for example).  

What happens next:  After a dentist submits reports for a first look, a lead broker will review the valuation with the client and let them know, based on what their needs are, if we’re the right brokerage /a good fit to move forward.  

If a dentist is open to feedback to take steps to get more money for their practice and we believe that by taking more time they can do that, we develop a customized action plan.  The conversation sounds like, 

Hey, based on what you've told us, and where you want to get valuation wise, here are the three things you need to build your practice up in order to get that return.

Our lead broker Nate Thompson speaks on what’s happened since PTG started offering a First Look. “I've done more and more first looks,” he said, “before bringing somebody on it's a good goal setter for everyone.  The doctor gets a transparent evaluation of the practice and exactly what they need to do for the exact return they want.  It’s a win win and it’s free to the client.  I’m not sure we offer a better service, expect of course, the eventual return we get them when we sell their practice for more than they thought possible.”

A Broker's Opinion of Value

Who it’s for: Someone needing the most accurate estimate of market value we provide, typically needing to ensure the sale will meet specific financial goals

What you need:  36 months of financials, payroll reports, and several EMR/Practice Software reports

How it works: A broker's opinion of value from PTG requires that we really get under the hood of your practice to find any points of risk that buyers may uncover, and to ensure we identify all areas of value in your practice. Our team will dig deep and provide our "go to market" EBITDA/SDE, and test that against our existing market comparable data. 

What happens next: An experienced broker will take those inputs and provide a single value that we feel the practice has a 80% or higher chance of fetching in the market. That value plus any notes, highlights, or areas for improvement will be highlighted in a formal report for the client.

In summary

A valuation is a way to put a price tag on a practice with the market in mind, and Practice Transitions Group offers multiple options depending on how close you are to actually listing your practice.

Curious about where a valuation fits into the larger practice transition process?  Download our Proven Process Map to find out.

Candice DePrang Boehm

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