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Specialty Dental Practice – Owner Will Stay 2+ years

Make $449,686 after debt service, 56% profit margin!

CASH FLOW
$972,498

Specifications

  • Revenue
    $1,842,474

  • Cash Flow
    $972,498

  • Profit Margin
    56%

  • Location
    Nebraska

  • Reason for Sale
    Industry consolidation

  • Equipment
    $425,000

  • Employees
    Fully staffed

  • Lease
    1,900 sq. ft.: Operatories, reception, break room, office, meeting room, storage

  • Intangible Assets
    Excellent social media reviews, loyal referral base, positive customer relationships, dedicated and well-trained team

Offering patients high-quality dental services includes over $425k in state-of-the-art equipment, a beautiful office, and same-day appointments.  Specialists in providing high-quality care as well as difficult to solve cases, this dental practice has a solid client base, excellent referral base, and a positive reputation including superb social media reviews.  Established in 2014, this practice earned an excellent 56% profit margin last year.  Experiencing year-over-year growth and annual income over $1.8MM in 2018, this business has the capacity to continue their upward momentum.

 

The sole dentist is supported by a well-trained and very knowledgeable team of three dental assistants and an office manager.  The business already owns and utilizes cutting edge equipment to provide the best services possible, so upgrading costly tools is not a concern.  The practice offers same-day appointments, yet this business has appointments on the books three weeks out, accommodating a wide variety of client availability. 

 

Growth for this business can be found in marketing to a wider referral base or extending hours to increase capacity.   Another dentist could be brought on to potentially double revenues, or to offer coverage for extended hours.  There is plenty of space within the current office to comfortably accommodate another dentist and the related increase of clients. 

Business Highlights

  • Location and Service Area: Eastern Nebraska and Western Iowa
  • Services: Dental services
  • Clients: Children through adults
  • Lease:  1,900: Operatories, reception, break room, office, meeting room, storage
  • Reason for Selling: Industry consolidation
  • Employees: Fully staffed with general manager and assistants 
  • Seller Training Period: Seller is willing to remain on for 1-2 years and/or will roll equity 
  • Growth Opportunities: Add another dentist, expand hours to increase capacity and availability
  • Current Owner’s Responsibilities: Practitioner- Normalized salary accounted for to retain or replace dentist.

Financial Highlights

  • List Price: $4,100,000
  • Gross Sales:
    • 2018: $1,842,474
    • 2017: $1,604,278
  • Profit:
    • 2018 EBIDA: $1,023,797
  • Assets Included in Purchase*
    • Equipment: $425,000: Specialized dental equipment, CT machine, office equipment
    • Intangible Assets: Excellent social media reviews, loyal referral base, positive customer relationships, dedicated and well-trained team

*amounts may vary

Profit Analysis

Description of Financial StatementTax Return
EBIDA
Tax Return
Cash Flow
Tax Return
EBIDA
Tax Return
Cash Flow
Notes
2018201820172017
GROSS SALES$1,842,474$1,842,474$1,604,278$1,604,278
Net Income Shown on Financial Statement$993,490$993,490$743,246$743,246
ADDBACKS
Compensation to Owner$0$275,005$0$270,005
11% Tax on total W2 Salaries$0$30,251$0$29,701
Depreciation$18,109$18,109$21,844$21,844
Interest$12,198$12,198$16,536$16,536
Travel$0$5,800$0$0
Cell Phone$0$1,400$0$1,400
Networking/entertainment$0$3,731$0$2,585
Auto Expense$0$7,311$0$8,033
Life/Disability Insurance$0$2,342$0$2,327
Medical Insurance$0$10,502$0$10,002
401K$0$141,270$0$118,299
Rent$0$-6,706$0$572
Dues$0$2,795$0$1,713
Replacement$0$-525,000$0$-525,000
TOTAL ADDBACKS$30,307$-20,992$38,380$-41,983
Seller's Cash Flow = Total Addbacks + Net Income$1,023,797$972,498$781,626$701,263
Profit Margin55.57 %52.78 %48.72 %43.71 %
  • Profit Margin 2018: 56%

Employees

Total employees: 4

  • 3 Dental assistants
  • 1 Office manager

Growth Opportunities

  • Add another dentist
  • Expand hours to increase capacity and availability

Valuation Details

The Firm used an EBIDA valuation methodology to determine the purchase price of the business. 

The formula used is as follows:

EBIDA             x          Prescribed Multiple     =          Fair Market Value

EBIDA is the sum of business net income plus interest, depreciation, and amortization.

A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.

For this business, a 2018 EBIDA was used with a prescribed multiple is 4.  With this information, the computation is as follows:

$1,023,797      x          4          =          $4,095,188

The fair market value found above positions the business list price at $4,100,000.

Funding Example

Purchase Price:                             $4,100,000

15%Buyer Down Payment:         $615,000

20%Seller Financing:                   $820,000

75%Bank Loan:                         $2,665,000

Seller financing 6-year term at a rate of 4% equals a monthly loan payment of $12,829.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $35,022.

After business expenses and loan payments, a buyer with a 15% down payment of $615,000 would retain a profit of $449,585, which results in a 73% return on investment in the first year.

A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $4,100,000 with the terms listed above, the coverage ratio is 1.78. 

Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

*The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.