The Practice Buyer's Corner - Random Musings from the Buy-Side
The Practice Buyer's Corner - Random Musings from the Buy-Side
The purpose of this blog is to share current, real world, experiences on the topics of practice valuation, practice transition, retirement planning, and building equity value - over time - in your dental practice.
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seanepp
seanepp

Practice Valuation & Equipment Decisions

4/25/2013 8:10:25 PM   |   Comments: 0   |   Views: 690
We get it - doctors like technology!  That being said, there is a not so delicate balance between equipment decisions and the valuation of a practice. 

Items to consider:

- One of the common misconceptions is that building a practice awash in high-buck technology - e.g. CAD/CAM, cone beams, lasers, etc. - directly adds to the value of a practice.  It almost universally works against the financial interests of the seller.

- Why does it work against the seller?  First, there is no guarantee that the prospective buyers of your practice place equal value or interest in your equipment choices.  Secondarily, even if they find the equipment interesting, there is no guarantee they can leverage it sufficiently to achieve the financial returns necessary to justify the investment.

- The primary way technology and physical plant can impact practice valuation is by their deficiencies, not their surpluses.  If you've allowed your physical plant to age and not remain contemporary  - i.e. possessing modern software, equipment, digital x-ray, flooring, walls, etc. - be prepared to have your valuation discounted for latent capital investments. 

- It is reasonable to expect a negative return on material investments like CAD/CAM, cone beams, or lasers as their upfront and carrying costs are rarely justified in a traditional family practice setting.  It is usually a matter of throughput/volume, not appropriateness.

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