Merely adding desirable technologies to your practice won’t substantially increase its value. But leveraging them the right way absolutely will—and that will buy you a more tranquil transition with greater peace of mind.

By Kristen Jordan

DOCTORS OFTEN RUSH to update technology when preparing to sell their practice, spending heavily on the latest equipment to attract younger buyers who expect modern facilities. This can make it more appealing, since outdated practices are seen as extra work and investment, which buyers want to avoid at the start of a transition. It won’t, however, result in a direct dollar-to-dollar boost to its fair market value in the short term.

That said, a practice far behind on technology can become unsellable, as its value diminishes the longer it stays on the market. Although investing in tech at the last minute may not directly boost its market value, doing so is better than letting the practice become worthless. Eleventh-hour tech upgrades are like renovating a restaurant’s kitchen right before sale—costly and unlikely to increase the value proportionally. So what’s the right approach?

The simple answer: Create a timeframe that allows you to take advantage of your new tech in a way that increases the practice’s value in the long term. Think of it like that new restaurant kitchen: If you install it a year or two prior to sale instead, you’ll be able to serve more diners better meals, faster and more efficiently, and in turn substantially increase the restaurant’s bottom line through increased customer flow and revenue. Being able to show a stronger P&L will obviously increase its value.

But investing in tech the right way is also about safeguarding your sanity as you plan to sell or retire. It’s frustrating and thankless to try to build value in a practice that’s maxed out at its current technology level. You’ll only end up working a lot more and a lot harder. But updated equipment and technology increase business and clinical efficiency, which can lower expenses and increase production. This means owners have a higher rate of return on each use, and the technology starts paying for itself and adding to the practice’s fair market value.

Upgrades also make patients feel like they’re receiving the best quality care. This is crucial because it gives them confidence to spread the word that your practice is where their friends and family should go. Building a larger patient base will directly increase practice value, and the addition of patients should yield an increase in production and collections, which will also make it worth more.

Eleventh-hour tech upgrades are like renovating a restaurant’s kitchen right before sale—costly and unlikely to increase the value proportionally. So what’s the right approach?

The bottom line: Investing in equipment too close to sale time without an implementation plan is at best a Band-Aid and at worst a sort of vanity project designed to make a practice look better than it fundamentally is—an illusion that is immediately exposed when potential buyers peep the P&L. However, timing tech upgrades with just a little more lead time and foresight will make the last few years of ownership much more enjoyable, productive and profitable. It’s worth it, and not just for the additional value. Your practice’s final years should be a victory lap, not a nightmare of worry and hard work. n

KRISTEN JORDAN is Benco Dental’s Practice Lifecycle Manager, providing comprehensive support for dental professionals throughout their careers. She has been an office manager, regional manager and operations executive for several large practices. Contact her at kj8713@benco.com or practicecoaching@benco.com.