Keeping Dental Practice Valuations Real - Lily Head Dental Practice Sales
James Head September 22, 2016 No Comments

I understand why dental practice owners can be influenced to select whichever dental practice broker simply values their business the highest.  Of course the sale price is a high priority but simply pricing a dental practice super high is not the only way (or even anyway), of realising the full and true value of a business.  The role of the broker is to get genuine interest from qualified buyers, in order to create a competitive environment that realises the best commercial and clinical arrangement for the vendor. In essence ‘Keeping Dental Practice Valuations Real’.

Going to the market with an inflated valuation often serves only to set the vendors expectations too high whilst disengaging prospective purchasers at an early stage in their buying process, as it triggers the ‘over – priced’ sensor that we all have whenever we are looking to buy anything from a yoghurt to a yacht.

That explains why the bidding for so many items on e-bay starts at 99p, but ultimately the item is sold for hundreds of £’s, by clients who may have been tracking it from its 99p valuation.

When I meet vendors whose practices are languishing on the market as the result of a prior over enthusiastic valuation, it often transpires they have wasted a good deal of time on fruitless viewings where interested parties and their lenders cannot subsequently make the numbers work.  Another consequence is that savvy buyers see a practice languishing on the market and tend to assume there are other matters other than simply price which are precluding a deal being done.  There is little motivation for buyers to buy a practice they can see no one else wants.  They can see that no competitive environment has been created.  At this stage, price reductions do not always have the desired effect because the desirability of the product has waned beyond simply price.  Keeping your dental practice valuation real protects you from this kind of malaise from buyers.

Finally, a vendor could find themselves working with a disengaged broker who now realises they cannot meet the vendors (inflated) or the markets (fair, reasonable and in line with current valuations) expectations on price, which of course the broker set at the outset.

We achieve excellent sale prices for our clients by keeping dental practice valuations real.  Demand remains very strong for larger mixed/NHS practices and profitable private practices, but we see that ‘keeping it real’ is ultimately the best foundation of a marketing strategy for vendors.  That, combined with a detailed sales resume which focuses on all the positives, but recognising the areas for improvement and proactive marketing will ultimately get the best results.