New Dental Practice Valuation Question

General questions about the appraisal of a relatively brand new office. I have been working as an associate for 6 months. I may get into partnership since I got offered.

I know that a practice with years can be assessed by an average of annual productions and collection rate. However, my office is only 6 months history.

Just be careful with this statement. Practice revenues should never be used as a way to value a practice. I believe what you’re trying to say is that selling prices of mature practices are more likely to fall within certain statistical ranges. This is not a valuation method.

Production has increased gradually since I started. My first months was 30K and now around 60K and collection rate is still low (~ 70% because we provide with monthly payment option).

It will be greatly appreciated if you can give me items I have to put into my list.

The value of relatively newer offices that are still growing significantly will usually require an analysis of the hard assets, the office layout, location, etc. and compare that with the cost of duplicating the same thing if you start from scratch. Add to this the value of the existing patient base AND the value of the potential (and growing) patient base. It’s a little more subjective and professional valuators are more likely to use a future cash flows method to assist on their valuation as past cash flows are basically meaningless in a brand newgrowing practice.

Sorry, not sure what you mean by “list”.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at

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