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How Dental Practice Appraisals Help Set Realistic Expectations

By John Shirts, CVA, CPA, CFA, Vice President of Appraisals and Data Analytics

A clear understanding of how much your dental practice is worth is imperative for making smart business decisions now and in the future. Dental practice appraisals help set realistic expectations, especially for your future sale.

Many dentists have heard different rules of thumb for determining practice value, often based on a percentage of their collections.

We advise against putting too much stock into these estimates because dental practice values as percentages of collections can vary widely. We’ve seen valuations anywhere from 50 to 120 percent of collections.

There are many factors that influence this, including:

  • Practice location and demographics
  • Type of practice (general vs. specialty)
  • Processes and systems
  • Employees
  • Digital technology
  • And many more!

As certified practice appraisers, some of the toughest conversations we have are with owners who had practice values in their head that were not well-founded. Sadly, this disconnect often occurs as dentists approach the end of their careers, making it difficult to course correct.

Some dentists count on their practice values to be a major part of their retirement plans. With inaccurate practice values in mind, some doctors are shocked when they learn how much potential buyers are willing to pay for the businesses.

We highly recommend you receive an independent practice appraisal to set realistic expectations for how much you will receive for your practice. An updated appraisal every few years will ensure that you have a clear understanding of your practice’s value.

When it’s time to sell your practice, you’re going to have a number in your head, so you might as well have a good one. And who knows? You might get a happy surprise where the appraiser’s number is higher than your own. 

Contact our team of Certified Practice Appraisers for a complimentary, confidential consultation to discuss your practice’s value.