We are celebrating the 20th anniversary of the founding of our company in 1993 by Mr. Evan Myers. Debbie and I joined him in 2003 and became owners in 2004. Evan retired in 2007 but still drops in every now and then to make sure we’re still working. Proudly, we are and look forward to many more years serving dentist clients in Missouri, Nebraska and Kansas.
Business is good in 2013. We are currently working on appraisal number thirteen for the year and added five new listings in the last quarter. Compared to the retirement rate in 2011 and 2012, those are huge numbers and we are excited about some other projects in the works.
Dave Higdon is a friend of mine through the antique car hobby. He has a beautiful red, 1965 full sized Ford convertible which I have followed on several tours around the Midwest. He is also a principle in the accounting firm, Higdon and Hale. I happened across a copy of their Summer 2013 Client Update newsletter which included the article; Six mistakes to avoid in selling your business. While their client base is diverse, I thought a number of key points applied to dental practices.
1. Overestimating the value of your business. Your price should be based on the fair market value of the business in its current form. Buyers won’t care about the work you’ve put into building the business or your unique vision of the future.
2. Failing to base your sales price upon independent appraisals. If the appraisal conflicts with your opinion, consider it a reality check.
3. Not hiring a professional business broker to handle the sale. A broker familiar with your type of business will know what issues are important to buyers and what characteristics to emphasize or de-emphasize without becoming emotionally involved. I like Dave.
In 2009 the ADA published a workbook on practice transitions. The only thing anyone remembers from that entire text is in the third paragraph on page 29; “Analysis of data from four separate national databases that have tracked the prices of dental practices between 1995 and 2005 reveals that the average sales price for general dental practices has been approximately 60% of gross revenues.” I have a couple of questions;
1. Who are the four databases? Since there are no jurisdictional recordings of these transactions, how accurate is the data? Is it applicable both nationally and regionally?
2. Has anything about the economy changed since 2005?
3. If 60% is the average, doesn’t that mean that about half of all practices must be below average? Try telling that to most practice owners! Statistically, the 60% number is accurate 2-3% of the time.
If you are going to seek advice from someone about valuation and sales, make sure they have actually sold someone else’s dental practice! Recently and maybe more than one! The world is full of anecdotes and experts who have never had to market to a buyer, obtain an offer, get financing for the buyer, deal with the real estate, negotiate a contract and close a deal. Be careful who you listen to. If you are thinking that retirement time is near, give me a call and we can talk about your practice and your plans. You may or may not like what I have to say but I promise to give it to you straight. EMA has now sold 230 practices in this market so we have a little objective insight that might be helpful to you and your family. There is no charge for a consultation.
Lastly, sometimes you can’t help but wonder if anything matters anymore. Well, let me tell you, the National Anthem matters to my 4 year old grandson, Ben. The candid picture below was taken at a recent Colorado Rockies game. Makes me proud.
Happy 4th!
Steve