How Poor Data Undermines Practice Value

When new patients walk in the door, they choose your practice above all others within your region. That decision reflects the quality of your operation and the components you’ve built to earn trust and a solid reputation. While they may be attracted by the brand message or Google reviews, they’ll often commit to a long-term reputation based on what they find under the hood after a visit or two.

If you’re considering selling your practice, buyers want to develop this same confidence in your business. Of course, they’re interested in the brand and operations, too. But they’re going to look much further at the pieces patients don’t see. And it’s in the deeper dive that sellers often get caught with less-than-ideal findings.

Critical practice data hides inside your practice management software and financial reports. Well-organized data makes it much easier for a buyer and their advisors to analyze and evaluate your practice. Unfortunately, we often see a motivated seller with sloppy reports, which can undermine a practice’s value or presentation. A few of these include:
Business and personal expenses mixed in the Profit and Loss statement

  • Revenue that’s not tied to individual providers
  • Poorly categorized expenses and unclear overhead percentages
  • Inaccurate active patient reports that show bloated numbers

Consider a hygiene-driven practice with two hygienists generating a healthy percentage of the practice’s production. For example, a buyer should quickly see the specific procedure mix assigned to each RDH and if periodontal procedures drive one-third of the hygiene production. With accurate employee reports, a quick analysis may also show if each hygienist is producing roughly three times their salary. Hygiene production can provide enough revenue to cover practice payments in many practice sales. Accurate reflection of this specific data can offer peace of mind to anxious buyers and support their purchase decision.

Credible Reports Drive Confidence

When buyers find messy data in their initial analysis, their confidence in your practice takes a hit. They start wondering if they will find other surprises in the corners of the business, and trust can slip further if the prospective buyer senses the broker is trying to explain away unclear data. A practice transition specialist wants to be squarely on your side with an attractive practice supported by unquestionable data. Trust is quickly lost in a potential transaction, and numbers don’t lie.

On the other hand, clean reports that reflect accurate information about the practice can build momentum towards the exit you envision. When the practice’s branding, operations, and finances reflect transparency and integrity, you’re positioned to move towards an ideal sale.

As baby boomers and even younger practitioners consider their exit plan, buyers have more practice choices to consider. And DSOs expect enterprise-level data that leaves little question about future practice growth. In a metrics-driven business environment, every buyer wants to see a straightforward story consistent throughout the complex reporting options available in today’s software.

If a buyer chooses between three similar practices in an area, the one with the best data usually wins. For example, you may have an exceptional reputation, friendly staff, and a modern setting. But if the inside information looks sketchy, you’re at a disadvantage.

It’s Never Too Early To Optimize

The time to clean up practice data is long before prospective buyers start browsing your listing. At DDS Match, we believe in helping sellers optimize their businesses to capture maximum value from a buyer that fits the practice. With guidance, your team and your CPA can tighten reporting to support the value you deserve.

Whether a few months or a few years from a listing, the time to increase your sales appeal is now. With the right approach, you’ll enjoy the return on your practice investment and a sale when you want it. Contact us today to set up a complimentary call to review your current situation, goals, and potential value.

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