Ask Gareth: how do you find out the true value of a dental practice?
Deciding whether to buy, sell or even lease a dental practice is a major decision for practice principals. The value of the practice building, whether that be for sale or lease, is likely to be the biggest financial consideration that most dental practitioners will encounter in their careers, and making the right decision has farreaching implications. It therefore follows that the information on which decisions are based must be as accurate and sound as possible, founded upon detailed analysis of the local property market, recent activity and intelligent forecasting.
Knowledge is power
At MediEstates, we have long been aware of how important an accurate valuation is and we always endeavour to offer our customers accurate appraisals of the value of their business. How do we do this? By accessing the latest information on the property market and analysing it in detail. We have access to the latest commercial property data from a variety of sources which tell us the price at which commercial properties were sold or leased all over the UK. Equipped with this information, we run reports on the average value, per square foot, that property commands in a particular area. We also have access to detailed demographic data which enables us to give prospective buyers a realistic idea of their future patient base potential.
What makes us different from other brokers is that we can drill down into the information within very precise geographical areas, which enables us to know almost street by street, what value commercial properties are realising. Whilst less sophisticated reporting covers individual cities or counties, our reports can divide a city into different areas, taking account of more affluent areas or those where disposable income is lower and looking at price trends to see which areas are growing and becoming more popular. We offer, as part of our brokering service, a full market appraisal of the property, including advice on different options such as selling or leasing.
Demographic insights for potential buyers
Our market analysis can also provide invaluable insight to potential buyers who wish to know the type of area a particular practice is located in. Our reports provide details of size of population, average earnings and other information which enables buyers to determine whether the area is suitable for the type of practice they wish to develop.
If a dental practitioner is considering spending around £1 million on a new practice, they must know what their patient base is going to look like and our full demographic reports give them that insight. In this way, they can make plans for the future, for example, planning to provide a range of cosmetic services in an area where there is more disposable income.
Getting it right from the start
Obtaining an accurate appraisal of the value of a practice at the outset means everyone’s expectations are managed. The vendor will want an accurate idea of what they can achieve if they sell or opt to lease to another dentist. The incoming buyer will want to make sure they are paying a fair price, and both parties want to avoid any shocks when the lending bank sends in their own RICS-registered surveyor to carry out a bank valuation.
Not just a knowledge appraisal
With our detailed knowledge of the dental property market, our valuers travel up and down the country visiting practice owners who are looking to make the next move. Having our commercial property market sub-reports on the area, we are able to meet the owners in the practice to discuss their current situation and plans for the future. While completing our assessment of the Goodwill of the practice, we also carry out a property appraisal in which we look at the actual bricks and mortar of the building to assess the physical assets.
We then discuss our findings and set out the available options. Having access to the latest information and expertise ensures the vendor is then in the best position to make the decision that is right for them.
Gareth Walton is Estates Manager at MediEstates, a Henry Schein company. If you have a question that you’d like MediEstates to answer or a topic you’d like to see discussed in this column, please email firstname.lastname@example.org or call 01332 321692