A recent dental graduate had an opportunity to purchase a large practice (over $1,000,000 of annual gross income) in his chosen area. The practice represented a once in a lifetime opportunity that would place him years ahead of all his classmates, in both practice size and income. The current owner wanted to change careers and would continue to practice two days a week for a few years while building a new and different business.
You will have a finite, but indeterminate number of years that you will practice dentistry. Whether you work until you die or become disabled, or quit because of illness or just plain burnout, you have a finite number of years to practice. It’s just that we can’t see how many years that will be as you start out on your career path.
Ask a recent dental graduate for a description of the practice he or she would like to purchase and you will hear, “I want a high quality crown and bridge practice, in the best area of town, where I can do my kind of work on my kind of patients.” For that matter, it would be amazing if a purchaser ever had a different response. Vanity is usually the reason he or she wants to purchase this kind of practice, but is it really the best opportunity?
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When you recognize the clinical and management compensation as an overhead expense, the overhead percentage should be 80% to 85% of annual gross collections for a well run general dental practice.
Just read the following letter sent to us by a dentist who chose to work with a unilateral, seller broker and see his results...
The most widely used method for determining practice value is fair market value. The commonly accepted definition of fair market value is the price which a professional practice would produce, allowing reasonable time to find a purchaser, with both buyer and seller having access to full disclosure of information about each other.
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