Deciding to buy or sell a dental practice is one of the biggest professional and financial decisions a dentist will make. Whether you’re preparing to sell after years of dedication, taking your first steps into ownership, or restructuring to bring in a new partner, one critical step ties everything together – establishing an accurate dental practice valuation.
But beyond the numbers and spreadsheets, a dental practice valuation is deeply personal. This is a business that may have taken decades to build, where patients have become familiar faces, and staff feel like family. Understanding its true value isn’t just about financials – it’s about the legacy and future of the practice.
Understanding Why You Need a Valuation
Before diving into numbers, it’s crucial to define the reason behind the valuation. Are you selling to retire, move to a smaller practice, or step up the ladder? Are you securing finance or bringing in a new partner? Your motivation will shape the valuation process, ensuring it meets your goals.
Gathering Financial Data
The backbone of any valuation is financial records. At least three years’ worth of accounts provide a clearer picture, smoothing out any anomalies like unexpected costs or the impact of a turbulent year (2020 comes to mind). However, even the most recent accounts can be outdated due to HMRC submission deadlines, so gathering current fee income, NHS contract values, and UDA numbers is essential.
Considering the Property and Practice Stability
Is the practice freehold or leasehold? If leasehold, how long remains on the lease? Understanding the property’s security is key, particularly for buyers seeking financial stability. Equally important is assessing staff tenure—long-term employees indicate a strong, trusted practice, whereas frequent staff turnover might raise concerns.
More Than Just Numbers—The People Behind the Practice
A dental practice isn’t just bricks, chairs, and equipment—it’s the people who make it work. The value of a loyal patient base, a committed team, and a strong local reputation cannot be underestimated. A practice with high patient retention and a positive standing in the community will naturally command a higher valuation.
Benchmarking Against Other Practices
Once all data is gathered, the next step is comparison. Looking at similar practices in similar locations gives a sense of market value. Urban practices may face stiff local competition, while rural ones might have a broader patient catchment.
At this point, everything circles back to the original question—what’s the next step? Whether it’s a sale, raising finance, or restructuring ownership, understanding the true value of your practice ensures you’re making an informed decision, supported by experts who know the sector inside out.
A practice valuation can feel overwhelming, but with the right guidance, it’s an opportunity to truly understand the worth of what you’ve built—and take the next step with confidence.
