Dear Reader,
In a traditional doctor-to-doctor sale, the ultimate driver of the transaction is simple: how much a bank is willing to loan to the buyer. And here’s where the problem lies: banks are conservative. They’re not looking at the future potential of your practice or its true profitability. Instead, they’re looking at risk—how much risk they’ll have to take on when financing the sale.
What does this mean for you? It means that when you sell your practice to another dentist, the value is typically undervalued. The buyer has to rely on a loan, which is based on the current revenue and assets of the practice, with little to no consideration of its long-term growth potential or profitability. Banks simply don’t take those things into account—they care about protecting themselves, not maximizing the value of your practice.