Two Factors That Contribute to Valuation for Any Dental Practice Sale in California

by | Dec 3, 2018 | Dentist

Many dentists devote decades of their professional lives to building and operating thriving dental practices. When the time comes to retire, it will always be wise to do everything possible to maximize the price received for a practice. For anyone contemplating a dental practice sale in California, understanding a few basic concepts will make it easier to ensure a successful, rewarding transaction.

Straightforward Ways of Valuing Most Dental Practices

Some dental practices in the Golden State are sold through simple word of mouth, often thanks to professional connections. Many other dentists opt to work with brokers who promise to handle issues like marketing and the pre-qualification of potential buyers.

For any dental practice sale in California, the price that is ultimately paid will normally depend most strongly on a couple of basic factors. The issues that contribute most directly to the market value of particular practices include:

  • Recent revenues: In just about any case, a broker or hopeful buyer will inquire early in the process about the recent financial performance of the dental practice. An average of annual revenues over the last few years will often be used as a starting point from which to arrive at a final valuation. Naturally enough, this means any dentist who is contemplating retirement shortly should strive to keep their practice as active as possible up until the time of the sale.
  • Type of practice: The revenues a practice generates are only part of the overall picture when it comes to determining profitability. Different types of dental practices will also have their characteristic profit margins, and these need to be taken into account as well. Orthodontics practices, for instance, tend to outperform general and family dentistry clinics significantly in this respect. As a result, an orthodontics practice will normally receive higher offers from buyers at a given level of revenue.

Plenty of Help is Always Available

Click here, and it will become clear how fundamental factors like these can be assessed alongside more particular and specific ones to arrive at a fair market valuation for any dental practice. Dentists who are better informed regarding what to expect for their practices will be more likely to avoid making potentially costly mistakes.

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