Why You Shouldn’t Wait Until You’re Selling to get a Practice Appraisal

Everyone understands that when it comes time to sell your practice, you will have to get a complete appraisal of its worth from a qualified professional—in fact, any prospective buyer will insist on it. But even if you are ten years or more away from putting your practice on the market, I recommend getting a professional estimate of your practice’s value, for your own purposes.

That’s because, as I wrote previously, a good retirement plan is put in motion at least ten years before exiting and starts with assembling a picture of  what you want your retirement to look like. And once you have a good sense of where you want to end up, it’s only logical to measure where you are now in relation to that end. Since the value of your practice is going to play a huge role in determining your exit choices, you will want to closely monitor your progress in this area.

This is not something you want to guess at, and it’s not something you should do yourself. There are a number of rules of thumb for assessing practice value that you may have heard of, but for the most part they are too generalized to be of much help—you’re simply not going to get an accurate reading by applying a simple one-size-fits-all formula. Then there’s the fact that dentists are, understandably, not that objective when it comes to evaluating their own practices. You may “know” that your practice is worth more than the balance sheet shows, based on your history and your inside knowledge of its potential. But it’s a simple fact that the value of your practice is defined by the marketplace, and it takes an objective outsider—one with specific knowledge of the dental market—to uncover your practice’s unique attributes and give you an accurate picture of how your practice measures up in relation to others.

A pre-appraisal for the purposes of planning is crucial information for any practice owner—it shows you in concrete terms where the best opportunities are in your practice and what you need to do to optimize them. It gives you an understanding of what your value is now, and what it can be. As a smart business owner, you need to gather this kind of intelligence to help you decide where to direct your efforts at improvement.