California Dental Practice Appraisal: How to Value a Dental Practice

Dental practice for sale northern california begins with a dental practice valuation California

Are you wanting to sell your Dental Practice?  Getting an accurate valuation regarding what the street sees as its value is critical.  Whereas others simply feed your data into a valuation model and derive a conclusion upon statistical averages, our assessments are based upon the pulse of the current market for your practice and performed by that party you interface with and not someone in another location who will never walk through your doors.  You do not want an order taker who funnels the valuation elsewhere.

Importance of Dental Practice Valuation

Dental practice valuation is one of the most important aspects of selling a dental practice, accurate appraisal. When it comes to selling your dental practice, Northern California based Professional Practice Sales brings expertise to the table. If you want an expert street-price dental practice appraisal in California, register with us today to get an accurate valuation.

Dental practice valuation involves determining the worth of a dentist’s business so it can be packaged and offered for sale at a price that reflects a value that shall entice buyers who shall want to investigate it. Understand there are fewer buyers today with more practices For Sale than ever before.

Determining the Value of a Dental Practice

The process begins with a dental practice appraisal, using valuation methods, doctor production, and market value, whereby the selling dentist (in this case, our client) and PPS work together to arrive at the appropriate sweet-spot asking price. Dental practice valuations are based on a wide variety of detailed information that must be reviewed and analyzed.   

Understanding how to value a dental practice begins with an understanding of components such as:

Dental practice for sale northern california

  • Practice’s philosophy
  • Patient mix
  • Patient flows
  • Payer mix
  • In Network or Out-of-Network
  • Provider relationship with Delta, specifically Premier or PPO
  • Service mix (including hygiene)
  • Staffing strengths/weaknesses
  • Office design
  • The nature of the delivery systems
  • Nature of the technology employed
  • The total capital investment in the practice
  • Overall curb appeal of practice
  • The current management systems
  • Accounts receivable management
  • Cash flows
  • Real profits
  • Overhead management
  • Areas where performance can be improved
  • The community where the dental practice is located and the larger neighborhood.
  • The anticipated buyer interest in the practice
  • Similar practices which have sold in the recent past
  • Any relevant valuation conditions in the marketplace which could have an impact upon the sale
  • Prevailing cost of capital to purchase a practice
  • Current economic conditions and prevailing consumer attitudes

Our Approach To Dental Practice Appraisal

At PPS, our experience has proven that the proper data and understanding of what creates value in a buyer’s eyes makes all the difference for your California dental practice valuation. The likelihood of your realizing the intended sale is significantly higher when buyers get the right properly packaged information and at the right price.   Accordingly, our dental practice valuation process is detailed and thorough. When we’re finished, the end result is:

  1. We will assess and evaluate your dental practice for sale northern californiaA more effective marketing package
  2. A quicker buyer response
  3. Buyers complete their “due diligence” swiftly
  4. Multiple competitive purchase offers can be realized
  5. A ratified purchase offer is realized sooner
  6. Financing gets approved in short order
  7. The purchase contract is finalized and the sale gets closed with few, if any, hiccups.

Dental Practice for Sale? Northern California-Based PPS Can Help.

Based on our valuation method of how to value a dental practice, our clients generally enjoy a completed sale within 120-to-180 days. Without such information, it can take a lot longer to sell a practice. 

Why? Over time, a “For Sale” practice runs the risk of being stigmatized as ‘stale.’ This leads to offers less than the asking price. In addition, such a practice runs the risk of having its “For Sale” status becoming public information, which then creates other issues for the owner.  

Your intent is to be positioned so the market is actively pursuing your practice rather than you chasing the market.    

Learn How to Sell a Dental Practice >>

Read Why Engage PPS >>

Ready to list your dental practice for sale? Northern California-based PPS can help. Register to Sell Your Dental Practice >>


Dental Practice Valuation FAQ’s

Accurate valuation is crucial for practice owners for fair market pricing, financial planning, and making informed decisions regarding selling or estate planning.

True valuation is determined by analyzing earnings, cash flows, patient demographics, technology, location, and market dynamics.  Understand that the values of practices constantly change as the marketplace changes.

Common methods include the earnings method, cash flows method, capitalized earnings, and appraisal of tangible and intangible assets.

The earnings method estimates value based on the practice’s ability to generate profits, often using a multiplier of net earnings.

Technology impacts valuation by enhancing operational efficiency and patient care, potentially increasing the practice’s market value.

Market conditions, such as demand for dental services and economic trends, can significantly influence the valuation.

Cash flows are crucial as they reflect the practice’s financial health and its ability to generate revenue over time.

Net receipts give a clear picture of the practice’s financial performance, crucial for determining its fair market value.

Patient demographics affect the practice’s stability and growth potential, influencing its overall valuation.

The efficiency and productivity of staff and doctors directly impact the practice’s profitability and attractiveness to buyers.

Intangible assets are evaluated based on their contribution to the practice’s earnings and market position.

An associate dentist can impact valuation by contributing to doctor production, patient retention, and overall revenue generation.  Having an associate can also have an adverse impact upon the valuation as the associate can go down the street and work elsewhere. The operating model of a practice with an employed associate needs to be taken into consideration, what the associate’s role is along with the type of successor who would most likely be acquiring the practice.

An appraiser provides expert guidance, ensuring a comprehensive and accurate appraisal based on various valuation methods and market data. The appraiser is not emotionally invested in the practice and is able to provide objective information regarding the appeal of the practice and how it sizes up in the marketplace.

Location affects appeal, market competition, and growth potential, all of which are key factors in valuation.


Industry Experts Comments

Extremely Detailed Appraisals

“During my 30+ years of working in the dental industry, I have the pleasure of meeting and working with many professionals. Ray Irving is one of the best. Ray’s appraisals are extremely detailed and his customer service even better!”

—JoAnne Tanner, MBA, Tanner Management, Granite Bay

Consistent Professionalism Makes Him Stand Out

“I have been working with dentists in one capacity or another since 1980 ranging from practice start-up’s and transitions, to management consulting, accounting and tax. I have helped many dentists purchase practices over the years and found every transaction to be a new learning experience, each with its own challenges and learning opportunities.

“Over this almost 40-year period, I have become very familiar with many dental practice brokers. They have come and gone but since the beginning of my career one in particular has stood out as being consistent. Whenever Ray Irving of Professional Practice Sales represents a seller, anyone looking at that practice receives a detailed offering summary of all the pertinent information and necessary facts to make an informed decision concerning the possible purchase of that practice. Ray digs deep into every practice.

He studies the demographics of the community, searches out the best financing alternatives, explores the premise lease terms and more. The investigating buyer shall understand top line and bottom line performance, the debt service dictated by the practice’s purchase and what is available to pay themselves for their efforts. This information is always laid out in an easy to read and understandable manner.

“Ray gets to know his sellers and gives them honest assessments of the value of their practices. He also makes sure that his sellers understand the journey they are about to embark on from the nuts and bolts of the necessary steps through the emotions they shall experience along the way and afterward.

“In my opinion this is where a broker creates real value for both his client the seller, and the buyer, because if any party to a practice transition is uninformed, the likelihood of that sale being completed is very low. With full disclosure to the seller before accepting an engagement, and extraordinary disclosure to buyers during the marketing phase, Ray ensures that the right buyer purchases his client’s practice and that both parties walk away feeling good about the deal. In being able to accomplish this deal-after-deal, Ray Irving has stood out in my mind as the complete broker and one that any dentist should feel good about working with.”

J. Haden Werhan, CPA/PFS, Partner, Thomas Wirig Doll Group of Firms, Member of the Academy of Dental CPA’s