Business Valuation for Buying a Dental Practice
The dental industry is a thriving market with lots of opportunities. According to IBIS World, industry revenue has increased at a 2.1% rate over the last five years. This steady growth offers increased value for dental practice owners. If you are looking to enter the dental industry, buying a dental practice may be right for you. Obtaining a valuation for buying a dental practice is an important step in the purchasing process.Â
Peak Business Valuation, business appraiser, works with and values hundreds of small businesses for purchase every year. Working with a professional business appraiser like Peak can reduce the stress that comes with buying a business. With a dental practice valuation from Peak, you can better understand the value of a dental practice. Schedule a free consultation below to learn more about how to value a dental practice.Â
What is a Business Valuation for a Dental Practice?
A dental practice valuation is an analysis of its fair market value. Professional business appraisers assess a dental practice’s financial health and analyze the industry’s strengths. This information helps future buyers understand the value of a dental practice. They can also use it to increase the value of a dental practice post-purchase. See Valuing a Dental Practice to learn more!
Dental Practice Valuation Methods
While analyzing the financial documents of a dental practice, valuation experts use various valuation methods to determine the fair market value. The most common valuation methods are the income approach and the market approach. The income approach values a dental practice by its income potential, while the market approach values a practice compared to similar practices. Using a combination of valuation techniques makes the valuation more specific and accurate. Check out How to Value a Dental Practice to learn more about valuation methods.Â
Negotiating a Fair Purchase Price for a Dental Practice
If you are looking to buy a dental practice, negotiating a favorable price is essential. A business valuation for buying a dental practice can help you negotiate a fair price. The fair market value provided in a dental practice valuation gives you the worth of a dental practice. Using this valuation can make you sure that you’re not overpaying for a dental practice. Read Negotiating a Purchase Price of a Business to learn more about negotiating a purchase price.Â
Peak Business Valuation is happy to provide you with a valuation for buying a dental practice. Our team of expert appraisers has experience coaching business owners while negotiating a purchase price. If you need advice on how to negotiate while buying a dental practice, schedule a free consultation with peak today!
Building a Strong Dental Practice Business Plan
Creating a strong business plan is an important part of maximizing the value of a dental practice. If you are trying to make a business plan, you should use a valuation for buying a dental practice. A dental practice valuation will give you detailed information about a dental practice. With this, you can build a specific business plan that addresses the needs of a dental practice. Reach out to Peak today to learn more about building a strong business plan. You can also read Using a Business Valuation for a Business Plan to learn more.Â
Understanding Opportunities of a Dental Practice
A valuation for buying a dental practice includes an industry analysis. As a part of this, business appraisers analyze key value drivers of a dental practice. Implementing key value drivers is a key component of increasing the value of a dental practice. See Value Drivers for a Dental Practice for more about key value drivers. Some key value drivers for a dental practice are:
Rising Incomes & Insurance Coverage:
A competitive labor market leads to higher-paying jobs with more comprehensive insurance packages. This is good for dental practices because they rely on private insurance payments more than any other revenue source.
Cosmetic Dentistry:
Increased discretionary income also leads to higher spending on non-essential dental services. Offering cosmetic treatments such as teeth whitening and alignment can diversify revenue sources for dental practices.
Steady Patient Volume:
Many customers have insurance that covers bi-annual cleanings and checkups. Dental practices depend on these repeat customers for a large portion of their annual income.
Technology Use:
Using new technology can lower costs and increase service offerings, thus increasing value. It can also create safer procedures and a better patient experience.
Identifying Risks of Purchasing a Dental PracticeÂ
Dental practices do not come without risk. Understanding and managing risk is an important part of running a successful practice. A dental practice valuation includes a risk assessment that you can use while running your practice. Minimizing potential risks can also increase the value of a dental practice. Common risks for a dental practice include:
- Labor Shortages:
Dental practices have seen a shortage of dental hygienists and assistants dating back to before the pandemic. This shortage increases the costs of hiring and retaining sufficient office staff. - Consolidation:
Dental Service Organizations (DSOs) and private equity firms are contributing to ongoing consolidation in the industry. This can threaten non-affiliated practices with higher operational costs and lessened negotiating power. - Coverage Limitations:
Since dental practices depend so heavily on insurance payments, coverage limitations can decrease revenue. Government providers such as Medicare, Medicaid, and CHIP have limited coverage plans for their constituents. - Government Regulations:
Dental practices must adhere to federal, state, and local regulations when doing business. This includes laws surrounding safety, patient privacy, and waste disposal.
Peak Business Valuation is ready to help you obtain a valuation for buying a dental practice. This valuation can help you recognize and minimize risks before purchasing a dental practice. Schedule a free consultation with Peak below to get started!
Securing Financing for Buying a Dental Practice
If you are looking to finance the purchase of a dental practice, a loan from the Small Business Administration (SBA) may be right for you. The SBA offers loans with favorable terms such as low interest rates, extended repayment plans, and low down payments. The SBA frequently requires a business valuation as part of the application process.Â
Peak Business Valuation works with over 90 SBA lenders nationwide. Peak can provide you with a dental practice valuation that you can use for an SBA loan. Check out SBA Loans or SBA Financing for more information. Reach out to Peak today to connect with an SBA lender that’s right for you!
Obtaining a Dental Practice Valuation Report
One of the most important parts of a valuation for buying a dental practice is the valuation report. A valuation report is a report of the fair market value of a dental practice. You can use this report in every aspect of the buying process. The valuation report identifies key value drivers and risks of a dental practice. This specific information is critical for potential business owners making important decisions. Read Business Valuation Report Made Simple to learn more about the valuation report.Â
Conclusion
In summary, getting a valuation for buying a dental practice is one of the most useful steps you can take before buying a dental practice. The information provided in a dental practice valuation report can help you in every decision you make. It will also help you maximize the value of a dental practice after the sale.Â
As a professional business appraiser, Peak Business Valuation frequently works with prospective dental practice owners. A valuation for buying a dental practice provides you with the fair market value of a dental practice. You can use the information in a dental practice valuation in any strategic decisions that you’re making. Peak can also answer any questions you have about how to value a dental practice. Schedule your free consultation with Peak today!