All things come to an end, and unless you’re one of the very rare exceptions, you’ll leave the practice of dentistry some day. Perhaps that day is coming soon because you’re ready to retire, your back and/or neck is killing you, or you’re just had enough.
If the time has come, or will soon, you’ll need to look at the sale price of your practice. The higher your earnings before interest, taxes, depreciation, and amortization (EBITDA) for several consecutive years, the higher sale price you can expect.
By one estimate, a solo practitioner can realize a sales price of 3–4 times EBITDA; a multi-doctor practice, 4-5 times; and a multi-doctor, multi-location practice, 5-6 times. Of course, there are other factors that can impact the sale price both positively and negatively, so positioning your practice for sale isn’t quite cut-and-dried.
First, It’s About Your Practice
There aren’t any firm figures, but turn-key dental practices for sale that are hitting all the marks are likely very rare. Think about how these factors can influence the sale price:
Type of revenue or revenue mix
Stable or growing revenue
Stability of patient base
With that many variables, predicting the sale price of any one practice is difficult, to say the least. Obviously, the more marks your practice hits, the better. And much like prepping a house for sale, consider investing some cash in refurbishing your facility if warranted. Otherwise, that’s likely to come off the top of any offer you receive.
But It’s Not ALL About Your Practice
It’s not a secret that dental service organizations (DSOs) are on a buying/acquisition spree. DSOs are a different kind of buyer compared to another solo dentist looking to own an existing practice.
DSOs are looking for practices that have good revenue potential, of course, but they’re also looking for practices that are a good fit for the DSOs structure and processes. For instance, if a DSO is looking to acquire a mix of practices that provide a broad range of services and internal referral possibilities, your practice will need to fit the organization’s needs.
Another consideration is whether you’re willing to stay with your practice after the sale to ease the transition for the new buyer. That’s often, but not always, a plus when it comes to determining the sale price. If that idea is off the table, an established DSO may be your best bet; the organization will likely be able to bring in at least one dentist (and additional team members, if needed) to handle the day-to-day caseload while it integrates the practice into its structure.
If The EBITDA Isn’t There, It Ain’t Gonna Happen
Have a look at your EBITDA; if it’s not what you want or need to realize a great sale price, it’s time to take action.
SmartBox has developed Success Academy, an online, on-demand, comprehensive program that covers every aspect of helping you and your team cohere as a focused unit to achieve remarkable revenue growth.
There are five metrics that directly impact your bottom line. Improving your team’s performance on the 5 A’s – Answer, Appoint, Attend, Accept, and Average – is the reliable way to increase your revenue without having to spend more on promoting your practice.
More calls answered equals more new patient opportunities. More patients appointed means more patients in your chairs. More appointments attended mean higher case acceptance. And higher case acceptance drives both your hygiene and restorative average case value.
That’s the formula for lasting success and maximum practice revenue growth. It’s also going to look really good to any prospective buyer. If you’ve got a year or more until you leave dentistry, SmartBox’s Success Academy will help you set up your practice for a great sale.