Practice Strategies

Medical/Dental Practice Value Enhancers

There are plenty of reasons to sell a medical or dental practice — retirement, as part of a vertical/horizontal growth strategy, etc. But whatever the reason for selling, you’ll want to start enhancing the value of the practice long before you even dream of setting a price.

Plan at least a year ahead. In fact, three years ahead is not too far. A physician who doesn’t have a plan for selling his or her practice risks being forced to sell it at “fire sale” prices.

Know what you’ve got. The truth is, the harder it is to start a practice from scratch in a particular location, the easier it usually is to sell an existing one (and the more it is worth). In addition, more competition usually adds more value to an existing practice's transferable cash flow.

Don’t slow down. Strive to maintain or even increase productivity and profitability, if possible, the two years prior to sale.

Look at the books (critically). Make sure that at least your last three years’ accounting conforms to industry standards. Your books should clearly segregate regular expenses from IRS Sec 179 capital assets, and clearly identify tax-deductible personal benefits, like health insurance, automobiles, employed family, etc.

Keep quiet. Don’t tell, or even insinuate, your plans to colleagues or staff until the right time. You might also consider using a confidential intermediary to protect the identity of the practice for sale and require a non-disclosure/non-competition agreement from any candidate prior to disclosure of your identity and data.

Get a professional appraisal. Note that medical practice appraisal is an unlicensed profession and there is much incompetence afield. The cheapest appraisal might be OK for the cheapest practices. But an extra $3,000 worth of research could result in an extra $100,000 in sales price.

Practice valuation is both an art and a science. And it’s an area where our highly experienced accounting professionals can truly help. Call our office today to discuss a valuation of your practice — or guidance on enhancing its value.

For more information about our services to the healthcare industry, Contact:
Maxine Lawyer, Director of Healthcare Services at 972.448.6905.

The articles in this newsletter are general in nature and are not a substitute for accounting, legal, or other professional services. We assume no liability for the reader's reliance on this information. Before implementing any of the ideas contained in this publication, consult a professional advisor to determine whether they apply to your unique circumstances.
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