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Omaha Dental Practice

Sold

CASH FLOW
$1,063,531

Specifications

  • Price
    $3,338,000

  • Revenue
    $1,913,138

  • Profit Margin
    55.59%

  • Location
    Omaha, Nebraska

  • Reason for Sale
    Pursue other interests

  • Inventory
    $1,500

  • Lease
    Operatories, reception, private office, conference room, break room, storage

  • Equipment
    $780,000

  • Intangible Assets
    Very positive reputation, excellent processes and procedures, excellent success rate, effective marketing strategies, very knowledgeable and well-trained team

Specialists in high-quality care as well as difficult to solve cases, this dental practice has a solid client base and an excellent reputation.  Offering patients high-quality dental services includes over $700k in state-of-the-art equipment, a beautiful office, and next-day appointments.  With year-over-year growth and annual income over $2.8MM in 2017, further growth is simply a marketing campaign away. 

 

Established in 2008, this practice is operating with sound financials and a 28% profit margin.  Working with a well-trained and very knowledgeable team, the combined working hours allow generous flexibility for all on staff.  Utilizing the best equipment available in combination with flexible scheduling allows clients to receive attentive premier care with a day’s notice, including late appointments.  

 

Unique in the approach to business management, the owner has implemented innovative policies and procedures that have greatly benefited the practice.  Working on cases as needed, the owner has hired a replacement to take over the caseload and can effectively operate this business with general oversight.  Growth for this business can be found in marketing new equipment, advances in the field, and recently on-boarded specialists.  Additional growth can be found in extending hours as well as hiring additional staff to increase capacity.

Business Highlights

  • Location:  Omaha, Nebraska
  • Clients: Children through adults
  • Services: Dental services
  • Lease: Operatories, reception, private office, conference room, break room, storage
  • Reason for Selling: Pursue other interests
  • Employees: Fully staffed
  • Hours: M-F 8-5
  • Seller Training Period: Negotiable
  • Growth Opportunities: Advertise to gain new referrals, market specialized equipment, hire additional staff to increase capacity
  • Current Owner’s Responsibilities: Owner/operator, staff have been hired to cover the owner’s cases

Financial Highlights

  • List Price: $3,338,000
  • Gross Sales:
    • 2018: $2,869,707 Annualized
    • 2017: $2,806,487
    • 2016: $2,503,841
    • 2015: $1,732,169
  • Cash Flow:
    • 2018: $1,595,297 Annualized
    • 2017: $794,827
    • 2016: $1,206,146
    • 2015: $954,984
  • Assets Included in Purchase*
    • Equipment: $780,000: Furniture, fixtures, dental equipment, specialized equipment, office equipment
    • Inventory:  $1,500: Supplies
    • Intangible Assets: Very positive reputation, excellent processes and procedures, excellent success rate, effective marketing strategies, very knowledgeable and well-trained team

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan. - Aug.
Tax ReturnTax ReturnTax ReturnNotes
2018201720162015
GROSS SALES$1,913,138$2,806,487$2,503,841$1,732,169
Annualized$2,869,707
Net Income Shown on Financial Statement$920,659$1,196,732$983,405$753,107
ADDBACKS
Compensation to Owner$68,000$111,029$110,284$105,292
Other unrelated Salaries$0$0$0$0
11% Tax on total W2 Salaries$7,480$12,213$12,131$11,582
Depreciation$0$1,457$1,457$9,024
Interest$167$17,248$17,303$24,627
Meals & Entertainment$1,529$5,845$2,782$1,726
Meals & Entertainment$0$0$773$0
Donations$1,279$0$500$0
Cell Phone$2,000$3,000$3,000$3,000$250/month
Travel$24,715$13,259$14,523$11,826Personal
Line Item 18 - Employee Benefit Program$3,746$0$285$0To the owner
Owner's Health Insurance$252$0$0$0
Wife's Wage$17,333$26,000$26,000$26,000
Continuing Education$15,245$31,497$31,899$7,43195% Personal
Owner's Life Insurance$1,083$0$0$0
Vehicle/Auto $43$2,955$1,804$1,369Personal
Replacement$0$-626,408$0$040% of $1,566,001 in Production
TOTAL ADDBACKS$142,872$-401,905$222,741$201,877
Seller's Cash Flow = Total Addbacks + Net Income$1,063,531$794,827$1,206,146$954,984
Annualized$1,063,531
Profit Margin55.59 %28.32 %48.17 %55.13 %
  • 28% profit margin in 2017!

Growth Opportunities

  • Advertise to gain new referrals 
  • Market specialized equipment 
  • Hire additional dentists to increase capacity 
  • Maintain social media engagement 
  • Capitalize on referral network 
  • Extend operating hours

Valuation Details

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          Prescribed Multiple     =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

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 2017 cash flow was used with a prescribed multiple is 4.2.  With this information, the computation is as follows:

$794,827         x          4.2       =          $3,338,273

The fair market value found above positions the business list price at $3,338,000.

Funding Example

Purchase Price:                             $3,338,000

10% Buyer Down Payment:             $333,800

20% Seller Financing:                      $667,600

70% Bank Loan:                             $2,336,600

Seller financing 6-year term at a rate of 4.50% equals a monthly loan payment of $10,598.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $30,706.

After business expenses and loan payments, a buyer with a 10% down payment of $333,800 would retain a profit of $299,182, which results in a 90% 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 $3,338,000 with the terms listed above, the coverage ratio is 1.6. 

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. 

Click to download NDA form

Print, sign and send to:

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

Or fax to:

f 402.939.0857

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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.