In summary, determining the true value of a dental practice is an art and science involving a plethora of practical considerations. 5/15/2014. Goodwill and the Sale of a Dental Practice. The value of a practice is actually reduced if the area is underserviced. In most cases, 75% or more of the value of a dental practice is goodwill. Given the complexity in valuing tangible assets such as equipment, consider how difficult it is to accurately assess the value of intangible assets such as goodwill, which constitute the greatest majority of dental practice value. i. Or it can be stated that the value of a dental practice that is exceeds the value of the tangible assets is the Goodwill of the practice. This method is often unreliable because it can undervalue older practices (i.e. The good news is that goodwill represents the majority of the practice value (sometimes 80-90%), and it is generally taxed at a much lower rate than regular income. When it comes to selling a dental practice, it’s important to consider its price, determined by both the marketplace and its value. One other item that can affect the tax consequences is how the purchase price is paid. Ahead of the LDC Conference tomorrow as Gold Sponsors, Dental Elite prepare the latest average dental practice goodwill values based on completed sales in the Last Financial Year (ending 31st march 2015). There’s a rule of thumb for dental practice valuation: 80-85% of the value of a dental practice comes from practice goodwill. In the case of value, it’s often about the intangible asset of goodwill – where a successful, long-standing practice has value that a brand-new practice … And even the 25% that may be tangible assets can’t be sold at close to that value, in the absence of ongoing practice … That goodwill becomes virtually worthless if the dentist and dental team aren’t there to treat patients. Commentary Personal Goodwill in the Sale of a Medical or Dental Practice In the sale of a medical or dental practice, much time is spent on negotiating the total purchase price, and rightly so. Being able to identify that likelihood and quantify its effect on a practice's value is a difficult task that requires many years of experience. Given that goodwill is intangible (not a real thing you can objectively see or touch), it is often the part of the valuation equation that is most difficult to calculate. That said, with the sale of a medical practice, in the final analysis, it often accounts for the largest amount of the value of the business. Understanding Goodwill Is Tough. their value in tangible assets. In most dental practice sales, a majority of the purchase price is allocated to goodwill. older equipment) and it’s difficult to appraise practice goodwill. What is goodwill and how can we get more of it? 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