You are probably no stranger to carrying out health checks. But now that you are looking to sell your practice, it is time that it also undergoes a health check known as EBITDA. This is to ensure you can get a premium valuation for your life's work.
EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortisation and your firm's score will provide a snapshot on the state of its economic health. It will also determine the price that could be achieved on the marketplace at the moment. Ultimately, your practice's EBITDA score is the best gauge for both investors and banks to understand the operating profitability of your business.
Your practice EBITDA score will be used by potential buyers to analyse its profitability and to compare it with others in the industry. In fact, EBITDA is the most popular metric used to determine the enterprise value based on a multiple when looking to buy or sell a group of practices or partner with private equity. Banks also use EBITDA as a common denominator when calculating leverage ratios and how much they are willing to lend. Now that you know why your firm's EBITDA score is important, it is also vital to understand why working out the correct EBITDA figure is important. That's because an incorrect value may make it difficult to find a bank or equity partner. Unfortunately, emerging groups regularly miscalculate their EBITDA and often overstate it because they include officer compensation or are only looking at practice level EBITDA. Things have also been made more complex since Covid-19 hit as the EBITDA level is now readjusted to accommodate any losses caused by dental practices closings due to the pandemic. Luckily, we are experts in the field and can use our experience to work out your firm's EBITDA rating correctly and quickly.
The best part of working with us is that we are fast and efficient. Let us help you calculate your firm's EBITDA score in three simple steps. To get started, all we need are your most recent set of accounts. Then you'll be asked to fill out a quick 10-minute form. Lastly, we'll have a friendly chat on the phone, which normally lasts around 40-minutes. That's all it takes to discover what price your business could fetch and bring you closer to achieving the type of retirement you have always dreamed of.
If you are not quite ready to sell your business yet, then knowing your practice's EBITDA score can help you start to plan your succession. We can help even if you're 10-years away from retirement because knowing your EBITDA score will allow you identify the realistic amount you can expect to get from selling your business and weave that information into your retirement plans. If you are not happy with your EBITDA score, then you will be able to come up with ways to improve the figure in the interim period to ensure you can maximise your practice's value. We will guide you every step of the way and suggest simple steps you can take to improve this. There are many ways in which this can be achieved such as increasing your turnover by bringing in more patients, improving treatment acceptance rates or growing the private services on offer. Even a small rise in turnover can have a significant impact on an EBITDA score and ultimately increase a practice's valuation.
To discuss what this might mean for your sale or acquisition, then contact us now on 01765 698699. There is no obligation to sell your business and the EBITDA check is completely free.
Since COVID-19 hit we have seen COVID-adjusted EBITDA become common to account for losses caused by practice closings due to the pandemic.
