The Sletten Group completes Practice Valuations for our clients in a variety of situations. We do them for:
- Clients who are SELLING their practice
- Young dentists who are looking to BUY a practice
- Partnership Buy-Outs
- Estate planning purposes
The influencing factors in doing a Valuation are; the current trends in the practice, the profitability of the practice, the reputation of the dentist, the location of the practice, the size of the active patient base (or referral base in the event of a specialty practice), the quality of the team, the nature of the suite, etc. We look at how each of these factors will influence the ability of a buyer to continue the practice after the purchase in a positive and successful manner in terms of future earnings potential.
We use three Valuation Approaches. One differentiates tangible assets and intangible assets, looking at trends and profitability. Another approach looks at all of the factors that influence practice value and rates a particular practice in terms of those factors. The third Valuation is an adjusted earnings approach where we arrive at a capitalization rate to determine the value of the business on the basis of an assumed rate of return for a buyer.
A fair purchase price is the price a talented buyer is capable of paying, while being able to retire the debt in a reasonable period of time (5-7 years) and live an ever-improving lifestyle in the process.