PracticeLink
Pass it on!
Image showing figures pondering a question

WHAT MIGHT BE YOUR PRACTICE VALUE

Recently you received two emails with links to a practice valuation calculator. We did not expect so many practice owners to click the links and try it out, what’s more, we didn’t expect so many to contact us with further questions on the subject.

I thought I would try to answer some of the questions you asked or some you may be wondering about as well.

What’s in the future for practice values?

  • Not sure. What I do know the lenders have said they will take the last twelve months to march and the next three months after the doors open as a minimum to understand where the practice sits in the future ( think I mentioned something like that recently).

Who is likely to want to buy my practice?

  • As it stands right now, many are still looking to purchase good practices.
  • I understand some corporates are still very keen to proceed once they see some light, maybe on different terms.
  • There will always be those looking for a bargain.

When are we going to get back to business?

  • I have no idea of the answer to this question. Still, I cannot see the dental industry remaining at level three for too long, considering the impact on patients in need of attention, including ortho patients.

How long will it take to get back up to speed?  

  • This question is for you to ask yourself; it depends on how you shut down. I had spoken to many who let the staff go early before the JobKeeper programme was initiated. A number have expressed their concern some long term staff have advised they will not be returning due to being terminated, etc. So I have no idea how to answer this question as there are so many variables.

Do you think things will get back to being the same as before Covid19?

  • Who knows! If I were a betting man, I would say no.
  • Too many things have changed, just the way you give people a wide berth in the supermarket, on the street, in Bunnings. my thought is hygiene levels will increase in practice (god knows how). Still, the whole world is going to be more cautious about everything, particularly around health and medicine.
  • I am sure APRHA or ADA will introduce new procedures, so watch this space.

House prices are dropping. Will practice values suffer too?

  • It’s too early to offer an opinion on future practice values. What I do believe is some will fall, some will fail, and solid performing practices will continue to flourish, it’s the law of averages.

In my opinion, there is some positive from this dilemma, and I am sure not all will agree.

For too long now, we have seen new practices pop up everywhere, and in a lot of cases not where they should be. Dentists have been spoilt when it comes to having access to cheap funding. Consequently, they have borrowed excessive amounts on the pretence they can make a new or rundown practice turn a profit within a short time. This is a classic example. Maybe it needed to happen, so some owners realised like older established principals it’s all about building a solid patient base and not purely about profit. Look after the patients and profit will follow!

For years I have had conversations with potential buyers who I can pretty much understand whether they will make it or not by the questions they ask.

Buyer one

  • Does the practice have preferred provider status
  • What’s the turnover
  • How long is the lease

Buyer two

  • How old is the practice
  • Is the owner prepared to stay for a while
  • Can you tell me the active patient base for the last four years
  • Is it mainly a family-oriented practice
  • Is the property for sale

It doesn’t take Einstein to understand which buyer has a better chance of survival in the long term, and interestingly we see more Buyer one practices for sale again within two-three years.

I hope this has made some sense in this crazy time we are locked in right now.

If you have time and would like to mess with the Appraisal calculators on our site, please feel free to click the links below.

I would like to offer you a Complementary Exit Planning Consultation about your practice. It takes just a few minutes over the phone.

Click the button below to register for your Complementary consultation:

Click to Register

If you would like to get some idea of what your practice could be worth, click this button below – it takes less than a minute:

What is your Practice Worth?
>