Developing and evaluating a dental discounted cash flow for the Korean dental clinic

Abstract

A total of 5,466 dental clinics were newly opened from 2011 to 2015, and 1,093 dental clinics were opened per year. Approximately 28% of the 1,093 dental clinics that reported establishment were transferred the existing dental clinics. In addition to dental clinic acquisition, there are many cases where value of the dental clinic should be assessed, such as the beginning or termination of a business partnership, or equity participation. Rational and simple dental clinic valuation methods are urgently needed. In order to develop the dental Discounted Cash Flow (DCF) for Korean dental clinic, I investigate the customary dental clinic valuation methods and deduce their meaning, examine the existing business valuation model and select the best model for valuation of Korean dental clinics, and developed a dental DCF for Korean dental clinic through a survey involving 218 dentists, which took into consideration the specificity of the Korean dental clinic. To evaluate the validity of the dental DCF developed in this study, I calculated the value of dental clinic of 40 applicants. As a result of five dental clinic valuation methods, the most favorable value of the Korean dental clinic was the dental DCF developed by this study calculated the vehicle-related expenses and personal benefit expenses as income. In conclusion, as a result of this study, the method of valuation of the Korean dental clinic is a method that reflects characteristics and recognition of the average Korean dentists by using the DCF universal corporate valuation method as a prototype. This dental DCF will be a useful guidance.