Congratulations, you've finally decided to take the plunge and sell the dental practice you have diligently built up from scratch. Letting go can be hard, but knowing that you're getting a premium price for your life's work makes any sale sweeter. But a successful sale starts with seeking out a professional and accurate valuation of your firm.
Getting this right will help determine the type of buyer you might be looking for and give you an idea of what you could gain from the sale. But like many of the aspects involved with selling a dental practice, valuations can be complicated. That is why it is important to justify the final figure produced because it will help a potential buyer secure money from the bank to fund the sale and ultimately facilitate a smooth transaction.
Covid-19 has also drastically changed the way dental businesses are valued and the process must now accommodate any losses caused by practices closings due to the pandemic. Luckily, we are experts in the field and can use our experience to work out your firm's value correctly and quickly as well as helping you avoid any common mistakes that may decrease your firm's final sale price.
Understanding how your business is valued is important in helping you find the right buyer for your firm. Ultimately, if you know what you are worth then you will not settle for second best and the same principle applies to your business.
Don't worry, you don't have to study a thick manual to get to grips with the process as we are here to guide you on what to expect. The main thing you need to know is your firm's Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) score. This will provide you with a snapshot of your practice's true operating performance and profitability. It is important to remember that all non-cash costs are removed from the accounts, including any capital investments and expenses.
The EBITDA value also removes any costs that will not be incurred by a new practice owner - such as a spouse's salary. The EBITDA value is then multiplied by a factor determined by the market at the time to provide an initial valuation. However, this does not always provide a viable investment on an associate-led model. Instead, the total adjusted income for a full-time principal is recorded and an adjusted EBITDA multiple is used on this figure instead. This process sounds complicated, but it is not if you work with us. We can 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 will be asked to fill out a quick 10-minute form. The last part of the process involves having 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.
It is never too early to get a valuation and start planning for your retirement - whether you are 2-years away or even 10-years away. Knowing your firm's value means you can start to take action now to maximise any future sale. It allows you to identify potential areas for improvement in the proceeding months or even years.
Let our team of experts use their industry knowledge to recommend specific strategies to help you maximise your business and get the very most from your sale. This may include increasing your turnover by bringing in more patients or improving treatment acceptance rates. Other possible options may also include growing the private services on offer at your dental practice.
It is important to understand that even a small rise in turnover could have a significant impact on your firm's EBITDA and boost the final valuation. Another way to potentially boost the value of a practice is to minimise your running costs and outgoings wherever possible. This is not about cutting corners, but rather eliminating inefficiencies. It might involve bulk buying routine products or improving your stock control processes to avoid any unnecessary waste. It may even include reducing bills for electricity and gas which will also work to minimise your dental practice's carbon footprint at the same time. Lab fees come under this umbrella as well, so ensuring that the practice works with high-quality, and fairly priced dental technicians is another important factor to consider.
We understand that money may not be the only diving factor when selling your business. Naturally, you may want to factor in a sense of legacy to the transaction and only negotiate with a buyer who can show respect for your accomplishments. But the reality is that the best way to get the right seller for your firm will start with getting an accurate valuation of your business so that you are in the best position to negotiate the most advantageous deal for yourself.
So, if you are thinking about selling your dental practice in the next 10-years, it would not hurt to start preparing sooner rather than later. If this sounds like the support you could benefit from then do not delay in contacting our expert team at Retiring Dentist who offer a free no-obligation dental practice valuation. Simply call us on 01765 698699 and move another step closer to creating the type of retirement you have always dreamed of.
