Here is an exchange I had with a dentist recently on how to value his practice.
Can anyone tell me their thoughts on how you value a practice that is 90% PPO. Is there any good will with this type of practice?
Probably, even though it is a PPO, patients usually have choices on dentists within the PPO network, so the fact that they’re choosing your practice over another means something.
I am currently practicing with my father and am a 49% owner in the practice and am trying to determine how we can set a value on our shares to determine a buyout.
Have the practice pay for a valuation specifically for this purpose. A valuation professional with experience in dental practice valuations AND who isn’t looking to broker the practice will be perfect.
I am producing 150 to 200,000 more per year than he is without including hygiene while seeing the same number of new patient prophys.
That’s generally a compensation issue, NOT a valuation issue.
He seems to think his shares are just a valuable as mine even though I have produced somewhere around 900,000 more than he has in the last seven years while only making 50,000 more in those years.
Was some form of agreement for you to earn less and work more (sweat equity?) Shares are valued the same and what you have is a compensation issue. Now if you’re going to argue that you shouldn’t have to pay full price for his half because of the compensation arrangement…..well I hope it doesn’t blind side him.
Yes, he has been here 30 years but most of the patients that have stayed with him have only stayed because we were on their plan. Our philosophies are so different and I am trying to determine a buyout plan or exit strategy. Any thoughts would be great.
Hopefully he’s on board with the thought of a buy-out plan or exit strategy. If he’s not, it may not matter who you get to value and assist with your ideas. The only way it’ll fly is if he’s on board and he’ll probably want some input. I know I would.