Where’s the Value in a Paid Valuation?

March 19, 2015

I had an interesting conversation with a dental principal the other day (who we have since been authorized to sell his practice), where he asked me how we value dental practices. Without going into too much detail, I told him we go through and ‘normalise’ his last 2-3 years financial statements, come and visit the practice, look at the fee schedule and find out more about the principal’s future plans etc. We then provide a conservative figure on what we think the practice is worth, also informing them that up to this stage there is no fee incurred.

He was about to pay for a valuation from a reputable, and well known, person who was going to charge him $3000 for the privilege.

Now, I have nothing against valuations, paid or otherwise, they are a must for anyone applying for finance, whether that be a residential property, commercial building, or dental practice.

Back to my dental principle; I then asked him, “So, for $3000 is this valuer guaranteeing you will sell for that price?” At this point he gave the obvious answer of, “No of course not”, and waited for my next obvious question which was, “So, if you sell for a higher figure than the valuer thinks it is worth, will you feel a little aggrieved that you’ve wasted $3000 for his ‘opinion’. to which he answered a rather reluctant, “Yes.”

I’m not a real estate person but some of their age old lines ring true and at that point I told him what every vendor hates to hear, “It’s only worth what someone is willing to pay for it.”

The dental practice market heavily favours sellers at present, as discussed in previous articles. This particularly rings true for the inner suburbs of major cities in Australia. I strongly believe we will get a higher price than he, we, or his valuer expect and will be happy to sit with him and have a glass of bubbly or beer when it does, at no expense to him.

Dental Prac Sales is a licenced business brokering company specialising in the dental industry. For further information please visit our website at or contact Alex Barritt or Matt Taylor for further information and a confidential discussion.