Highly Profitable Pediatric Dental Practice
This Southwest Nebraska specialized clinic with 67% profit margin supports patients in Nebraska, Kansas and Colorado. The practice started less 9 years ago and has grown to revenues of $825,317 in 2014. Current patient count is 4,411 with an average of 30-35 patients scheduled per day. The business receives referrals from 15 doctors.
The current Owner has four employees in place – 1 office/front desk and 3 assistants. Owner is the dentist on staff. The 1248 sq. ft. office has 4 operatory rooms and one central play area.
Owner cash flow in 2015 annualized was $475,733 representing 67% of the $707,612 annualized gross sales for the year. The $399,596 in assets included with the business include $270,170 in machinery and equipment, $11,748 in computer equipment, $41,243 in furniture and fixtures, and $76,435 in accounts receivable. Machinery and equipment include 2 BIOLASE turbo lasers and Dexis digital x-ray equipment.
Current Owner will assist with transition and training for a period of 90 days post-close. Office is currently open from 2-5 pm on Mondays and 8am-5pm Tuesday through Thursday, so a new Owner could expand practice hours to increase gross sales.
With a cash flow of $475,733, a new Owner could retain $347,893 in net operating income after debt service and would realize a 440% return on investment on a $79,000 down payment.
- Been established since 2008
- Servicing patients located in Nebraska, Kansas, and Colorado
- Located in Southwest Nebraska
- Active Patients is 4,411
- Seeing an average of 30-35 patients daily
- Currently has 15 referring doctors to the clinic
- Staffed with 1 Office/Front Desk personal and 3 Assistants
- Growth Potential would be by expanding office hours
- List Price: $790,000
- Gross Sales
- 2016: $824,161
- 2015: $743,655 – owner was severely injured for 1.5 months and was unable to practice
- 2014: $825,317
- 2013: $762,619
- Owner Profit/Cash Flow
- 2016: $533,42
- 2015: $481,289
- 2014: $540,484
- 2013: $482,213
- Profit Margin: 65%
Assets Included: $399,596
- Machinery & Dental Equipment: $270,170 (includes 2 BIOLASE turbo lasers, Dexis digital x-ray equipment)
- Computer Equipment: $11,748
- Furniture & Fixtures: $41,243
- Accounts Receivable: $76,435 (current to 90 days)
- Intangible Assets: Established repeat client list
- Build-out: $115,873
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
January - December
|Tax Return||Tax Return||Tax Return||Tax Return||Notes|
|GROSS SALES||$824,161||$743,655||$825,317||$762,619||$760,069||Seller severely injured for 1.5 months in 2015|
|Net Income Shown on Financial Statement||$198,964||$131,176||$211,934||$270,933||$378,917|
|Compensation to Owner||$285,642||$292,237||$269,229||$150,752||$0|
|Other unrelated Salaries||$6,500||$6,500||$6,500||$6,500||$6,500||Wife's Salary|
|11% Tax on total W2 Salaries||$32,135||$32,861||$30,330||$17,298||$715|
|Meals & Entertainment||$550||$349||$840||$687||$1,033||Expenses unrelated to business|
|Seller's Cash Flow = Total Addbacks + Net Income||$533,042||$481,289||$540,484||$482,213||$491,289|
|Profit Margin||64.68 %||64.72 %||65.48 %||63.23 %||64.64 %|
- 65% profit margin in 2016
- 9.7% increase in gross sales from 2015 to 2016
- Owner had a severe injury that prevented working for 1.5 months during 2015
- Total revenue in 2016 was $824,161 compared to $743,655
- Revenue outpaced expenses for every month expect March
With referrals from 15 doctors and an average of 30-35 patients seen per day, this pediatric practice has over 4,400 patients across Nebraska, Kansas and Colorado. Services provided include:
- Oral health for children from infancy through teenage years
- Dental emergencies
- Cut or bitten tongue, lip or cheek
- Knocked out permanent tooth or baby tooth
- Chipped or fractured permanent tooth or baby tooth
- Severe blow to the head
- Possible broken or fractured jaw
- Dental radiographs (x-rays)
- Pulp therapy
- Sealants and fluoride treatments
- Mouth guards
- Nitrous oxide
- Conscious sedations
- Outpatient General anesthesia
- This is an owner/operator dental practice, and as it has a pediatric focus, there is no need for dental hygienists.
- There are a total of 4 employees:
- 1 office/front desk manager
- 3 assistants
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business. The formula used is as follows:
Cash Flow x Multiplier = Price
“Cash flow” is the sum of net income plus any owner perks and non-onward going expenses.
“Multiplier” is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation (average is 3).
The Cash Flow for 2015 annualized is $475,733. The prescribed multiplier is 1.7
With this information, the computation result follows:
$481,289 x 1.7 = $818,191
The List Price for the business is set at $790,000. The business is discounted due to the Seller’s desire to move out of state.
Using the Cash Flow of $481,289, the Buyer’s Net Operating Income after debt service would be $353,449. Assuming a 10% Buyer down payment on the Purchase Price $790,000, the Return on Investment in the first year would be four-fold.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
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% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
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Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
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Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2015 Cash Flow
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Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
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