What might surprise people is the number of dental offices for sale in San Francisco Bay Area. However, these sorts of opportunities are fairly plentiful. There are numerous reason’s why a dentist or group of dentists would want to sell their existing practice, but regardless of the reasons, perhaps the biggest aspect of selling practice is to put a reasonable list price on the practice for sale. To do this, a comprehensive valuation of the practice will need to be done.
A Broad Approach
The easiest way to value a dental practice is with the rule of thumb approach. This sets the price of the practice at around 70 percent of the last year’s gross earnings. The problem with this approach and a reason why it isn’t often used is that it doesn’t take into account things like varying earnings, equipment or location. All these things can dramatically change the actual value of a practice.
Comparison Value
The next approach is the market comparison option. This is helpful in setting a value on the practice under the other practices in the area that have recently sold. This alone may not be a great way to set an exact price, but it is a good method of determining a ballpark figure of what a selling dentist could potentially put as an asking price for their practice. Often, this approach is used, but it is often used in combination with another valuation method.
A More Detailed Method
That other valuation approach is called capitalization of earnings, and it starts with the pre-tax net income of the practice. This method also includes a capitalization rate that divides the income pursuant to the different facets of the business. This allows for a better overall picture of what a practice contains such as staff, equipment, facilities and a patient roster, and determines what those facets do to add or subtract from the net income. This is the most widely used form of valuation.
When working with a dedicated dental practice broker, like Western Practice Sales, a selling dentist will get many different services. However, one of the most important services is proper valuation. By doing this, you’ll be able to set a more realistic price for dental offices for sale in San Francisco Bay Area which can help reduce the time it takes to sell your practice.
