What's Your Dental Practice Worth? 2 Ways To Find Out...

Value is like a lighthouse, providing us with direction, meaning, and purpose. Knowing the value of your dental practice is key when looking to grow your business. But how do you determine the actual value of your practice? In this episode, Dr. Bryan Laskin does the math for you and talks about the simple ways you can elevate the value of your practice!
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[@abdnourbelalia2085]

I like your methode, I'm in the psychology of marketing for dental practices, psychology of: targeting, ads, pricing, storytelling, loyalty and word of mouth....
Can I ba part of your team?

[@MrGameMeister]

I'm curious why there is a substantial difference in DDS vs DSO valuations. Is it simply that for a DSO, they are looking at a longer term investment and income potential than a DDS might look at?

[@wendythomas5417]

How is 50% profit possible unless you are not including associate/dentist pay? If profit is closer to 20% (which I think is more standard) then the difference is much less between selling to DDS or DSO.

[@dr.bryanlaskin6426]

Actually 50% profit is quite possible (not including dentist pay, as you state here). Still, if you are looking at an EBITDA of 20% with a very conservative 5x valuation of EBITDA on $1M vs selling to a DDS at 75% of collections, you would sell a smallish practice, like this, at a 25% discount to a DDS. While a smaller differential, I think most dentists would argue that selling for 25% more is significant.
Then, if you factor in the factor in the likelihood of selling at a higher than 5X valuation and the ability to add more practices, higher production and making changes to increase your profitability (which should be relatively easy if you only have 20% profitability), the differential goes up significantly.
Thanks for the thoughtful comment!

[@wendythomas5417]

@@dr.bryanlaskin6426 Awesome. I'm never clear on if people are including dentist pay or not in their profit, and it obviously makes a big difference! Are you suggesting that DSOs are paying a 5-6 multiplier and using a profit/EBIDA calculation that does not include dentist pay as an expense?

[@dr.bryanlaskin6426]

@@wendythomas5417 Good question. Frankly, it depends on the DSO, the practice and the situation. In this case ($1M annual collections), the dentist's "pay" would typically be around $225k (DDS production 25% of collections = $750k x 30% for pay = $225k). This would reduce the total profit to $155k annually, or the same 5x valuation to be $775k (only 25k more than selling to a DDS).
IMO, this would be a practice that would be on the low end of what a DSO would be looking for, as well as a multiple that would be on the same low end. Typically the 30% of collections that a dentist would take home includes some costs that would be added back too (like licenses, CE, other "perks" that dentists tend to pay themselves for that the DSO either would not have to pay in the future, or would not be considered a reduction to EBITDA).
While you are correct that this video is, quite possibly, an over exaggeration of the complexities of practice valuation, I am attempting to communicate to practice owners the way the math is done, so that they can position their practices for the best return (whatever that means to them). Thanks again!

[@AmitSharma-zd3ed]

@Dr. Bryan Laskin, does it include property like dental space or clinic?