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The first step in selling your dental practice is to have it appraised. With an accurate appraisal/valuation, you can place your practice on the market with confidence. At Watson Brown, we use a customized method to ensure you get an accurate, comprehensive appraisal.
Why Appraisals Matter
It’s crucial that you know the value of your practice before you sign a listing agreement or have a broker list your practice for sale. Your practice is your most valuable asset, and without an appraisal you can make major mistakes during the sales process.
An accurate valuation of a practice is one of the most important and complex components of a transition. The fair market value of a practice is not equated using a simple equation or multiplier, but demands a comprehensive understanding of both the objective and subjective factors. Determining the true value of a practice involves many factors, including location, equipment, staff, patient base, and cash flow. Having an experienced valuation expert means maximizing your practice value.
How Dental Practices are Appraised
There are three formal approaches used to appraise a dental practice: the Asset Approach, the Income Approach, and the Market Approach.
The Asset Approach considers a practice’s tangible assets (like equipment) and intangible assets (like a practice’s goodwill) to determine its value.
The Income Approach uses a Single Period Capitalization Method to determine how much a potential buyer can afford to pay for a dental practice based on the practice’s revenues, expenses, debt service, and the purchaser’s income.
The Market Approach uses sales information on similar practices to determine the market value of a practice, comparing elements like location, cash flow, equipment, office amenities, and fee structure to a database of sales records.
The Watson Brown Appraisal Method
There isn’t one perfect approach to dental practice appraisals. At Watson Brown, we use a combination of all three methods based on what is best for the unique practice we are appraising.
A thorough and accurate practice appraisal requires meticulous data collection, market research, and analysis. Our comprehensive appraisal process provides an analysis of your practice’s total worth by analyzing your staff resources, location, equipment, fee structure, and patient base as well as many other factors. And as a member of ADS, we have access to the nation’s largest database of practice sales data, allowing us to formulate appraisals based upon a comparison of similar practices.
