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Dental Elite: “Professional and supportive”

Dental Elite: “Professional and supportive”

 

 

“Whilst at a seminar on ‘selling your practice’, I met Luke Moore, a representative of Dental Elite” says Dr John Campbell who has recently sold two of his practices. 

 

“The valuation was organised promptly, we had a fantastic response and we received the full asking price.

 

“Despite the fact that a deferred consideration was involved pursuant upon contract extensions, Luke’s confident and professional approach eased the process; to date the deferred considerations have been met with no issues.”

 

Naturally, when it came to selling his second practice, Dr Campbell felt that there was really only “one choice of broker.”

 

“Full asking price was once again achieved and this time without a deferred consideration, despite only one year remaining of the contract!” John adds. “I think that this is testament to Dental Elite’s accurate understanding of the dental market.

 

“I would whole heartedly endorse Luke and Dental Elite for their thoroughly professional and supportive approach to selling a dental practice. Selling can be a very stressful event but Dental Elite certainly eased the process! I would without hesitation, recommend Luke and his company to any colleague, and indeed have already done so.”

 

For more information and to find out how Dental Elite can value
and assist your practice sale visit
www.dentalelite.co.uk, email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 01788 545 900

  6605 Hits
6605 Hits
JUN
01
1

Valuations – a science or an art?

Written by Luke Moore of Dental Elite

 

 

Dental practice valuations are often shrouded in mystery but they needn’t be; here we give you an insight into the process behind the numbers.

 

It’s true that since the introduction of business-focused stakeholders into the dental profession, as well as a more concerned credit team in lending banks; the computations behind goodwill valuations require more logic.

 

Demand for dental practices prior to the 2006 NHS contract and the relaxation of the Dentists Act 1985 was far more limited than in the present market. The NHS contract change installed a scarcity value in NHS contracts, restricting competition significantly. With one of the main concerns business owners previously had removed, practice values doubled if not tripled by August 2007.

 

Valuing a dental business is now much more of a thought-provoking process and solely using percentages of turnover as a method of calculation is no longer satisfactory.

 

Alternatively, EBITDA modelling can be used to provide the true operating profit of a dental practice, however, multiplication of a practice’s existing EBITDA does not serve as an accurate calculation of practice valuation either.

 

EBITDA or Earnings Before Interest, Tax, Depreciation and Amortisation, is an accounting acronym that does exactly as it says. The process of calculation involves removing all of the non-cash costs in your accounts such as depreciation and anything that a new practice owner would not continue to incur. Once the EBITDA figure has been established, this is then multiplied depending on the company, market and economic climate.

 

Currently, dental practices are being sold for between four and seven times their EBITDA. This can vary depending on a number of factors, however, generally the lower the perceived risk and the more sustainable the profit is (or is perceived to be) the higher the profit multiplier.

 

Unfortunately calculating this is not as simple as one might think and many practices are far less clear-cut. Practice A and B are radical examples, but even a small difference of £20,000 in projected EBITDA terms can be the equivalent of £140,000 in value.

 

It is also important to remember that your profit and loss EBITDA calculation will not be the same as the buyer’s EBITDA. This is because EBITDA and multiples rely on each other to make the valuation work, for example, five times profit and loss EBITDA might not be as attractive as a purchaser’s adjusted net income at four times. Furthermore, the EBITDA used may not always be your actual EBITDA. When analysing the valuation, it could be that the amount of money you spend on associates, materials, labs, staff and other areas is higher than what other buyers would spend. Therefore the higher valuation may come from a lower valuation multiple, multiplied by a higher projected EBITDA.

 

Calculating the valuation of your dental practice is not a simple procedure and a number of variables need to be taken into account. Working with trusted experts, such as Dental Elite, who can offer you the necessary advice and support is crucial.

 

Dental Elite is the second largest specialist practice sales agency in the country, offering a comprehensive and transparent service. The experienced and knowledgeable team can provide you with a free and non-committal valuation. Following a visit to your dental practice they will provide you with a Healthcheck Report, which demonstrates exactly how they have calculated your practice’s value and how it could be improved.

 

Although dental practice valuations remain as much a work of art as they are a science, understanding the process will reduce the mystery surrounding the calculations. By working with professionals who are experienced and current in dental practice valuations an accurate and transparent valuation will be achieved.

 

For more information and to find out how Dental Elite can help you, visit www.dentalelite.co.uk, email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 01788 545 900

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Recent comment in this post
Alan Suggett

The mystery of Goodwill valuat...

A very interesting article Luke, it can only help to remove the "smoke and mirrors" from dental practice valuations. The nub of it... Read More
Thursday, 04 June 2015 10:07
6039 Hits

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