Your practice isn’t worth what it pays you. It’s worth what it pays the next owner after you leave.
A buyer pays for cash flow they expect to collect. Your skill and your patient relationships don’t transfer. They leave with you.
The Arithmetic
Take an illustrative practice. It collects $1.5M, overhead runs $900K, and the owner takes home $600K. The owner personally produces $1.0M of that.
The buyer replaces you with an associate paid 30% of production. In year one, the associate produces $800K, because some patients came for you. Collections drop to $1.3M. Overhead eases to $850K. The associate costs $240K.
What’s left is $210K. You were taking home $600K. The buyer’s multiple applies to $210K. The difference was never profit. It was your wage.
What Your Presence Buys
If the buyer needs you to stay, they won’t pay more for it. They’ll require it, through a work-back or an earn-out. Your presence doesn’t raise the price. It shifts the risk to you.
This applies most to DSOs and financial buyers. A dentist buyer may value your patients more generously, but they’re still pricing what transfers.
The Absence Test
Pull three numbers. First, what share of collections do you personally produce? Second, what share of treatment over $2,000 do you present? Third, the last time you were gone for two weeks, what happened to collections?
If those numbers make you uneasy, you’ve found where your value leaks. The practice you can sell is the one that runs without you.
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