When it’s time to sell a dental practice , many dentists focus on tangible assets such as equipment, furniture, and real estate. But there’s another, often larger, piece of the puzzle: goodwill. In a typical transaction, dental practice goodwill value can account for the majority of the overall dental practice valuation. It’s the invisible yet powerful factor that drives revenue and buyer confidence.
In this blog, we’ll explain what influences dental practice goodwill, and how to strengthen it before you sell a dental practice.
So, what makes one practice’s goodwill stronger than another’s? Several key factors affect the dental practice valuation , including:
• Reputation in the community and online
• Length, activity and stability of patient relationships
• Recall systems
• A cohesive, long-standing staff
• A high-visibility location
• Cashflow of your practice
All of these factors feed into what determines how to value a dental practice’s goodwill.
Boosting goodwill before a sale isn’t something you do last-minute. The earlier you start, the more impact you can make.
Here are key strategies for increasing overall and goodwill value:
• Enhance Patient Retention: Build stronger loyalty through follow-up systems, recall reminders, and exceptional service.
• Build a Strong Brand and Online Presence: Ensure your website is modern and easy to navigate. Encourage reviews and keep your social media content and branding consistent.
• Stabilize and Train Staff: Staff transitions can shake patient trust. Cross-train your team, foster a supportive culture and make sure your staff knows you value them and that they are an integral part of your team.
• Boost Operational Efficiency: Use modern practice management tools, standardized workflows, and streamlined billing to make the practice more appealing.
• Improve Financial Performance: Increase revenue through consistent production while keeping overhead in check.
• Ensure Legal and Compliance Readiness: Have your financials in order, maintain proper licenses, and document processes. These are key to building confidence in your dental practice’s goodwill value.
On the flip side, certain missteps can significantly reduce the perceived goodwill of your practice, such as:
• Sudden staff turnover
• Pulling back from patient interactions too soon
• Year over year decrease in collections
• Negative reviews or a lack of online visibility
Buyers take all of these into account when assessing how to value a dental practice’s goodwill.
Buyers want more than just a profitable practice; they want confidence in what they’re buying. When evaluating the dental practice goodwill value, they’re looking for:
• Predictable income from loyal patients or referrals
• A smooth transition plan with minimal disruption
• A respected presence in the community
• A strong, cohesive staff
• Clear pathways for future growth
If you can offer these, your practice becomes far more attractive when you sell a dental practice.
This is where a knowledgeable dental transition specialist , like an ADS dental practice broker , can make all the difference. Unlike general business brokers, ADS professionals understand the nuances of dental practice valuations and can effectively position your goodwill to attract qualified buyers.
An ADS broker can help:
• Accurately assess and explain your dental practice’s goodwill value
• Highlight the right elements in your marketing package
• Help navigate legal documentation and due diligence
• Connect you with serious buyers
• Minimize your tax liability from the sale
ADS brokers understand how to value a dental practice’s goodwill and how to convey that value in a way that resonates.
Goodwill takes years to build and it’s one of your most valuable assets when you’re ready to sell a dental practice. The steps you take today will directly affect your return tomorrow. Strengthening long-term patient relationships, building your brand and online presence, ensuring staff stability and keeping your production numbers up can all boost your dental practice’s goodwill value.
Whether you’re planning to sell next year or just starting to explore your options, it’s worth speaking with an ADS dental practice broker . We’re here to help you understand your numbers, improve your position, and get the most from all you’ve built.
Lisa is the managing partner, and also the current president, for Radman, White & Associates, inc. She has assisted hundreds of both practicing endodontists and residents in the matters of securing associateships, buy/ins and buy/outs, valuation, and other transition issues. Lisa lectures extensively to residents and practicing endodontists across the country at the AAE meetings and at resident venues on transition issues. With 25 years of transition experience, the goal for Lisa is to treat others as she would like to be treated.
