How Much Is Your
Dental Practice Worth?

How Dental Practices Are Valued

The calculator gives you a starting range. Behind that range are a few standard methods, and each one answers a slightly different question.

Market-Based Approach

This method asks what similar practices are selling for. It uses sale data or rules of thumb such as a percentage of collections. It is a quick check on whether a price is reasonable, but it can miss real differences in profitability between practices.

Earnings-Based Approach

This method starts with adjusted EBITDA, which is profit normalized for owner perks and one-time items, and multiplies it by a market multiple. The multiple reflects practice size, specialty, growth potential and transition risk. For example, adjusted EBITDA of $300,000 at a multiple of 4 gives a value of $1,200,000. Smaller or riskier practices usually sell at lower multiples.

Discounted Cash Flow Approach

This is a forward-looking version of the earnings approach. You forecast future cash flow and discount it back to today at a required rate of return. It is useful when the future should look very different from the past, such as a practice with a big expansion plan, but it is sensitive to its assumptions.

Net Asset Approach

This method adds up equipment, inventory, receivables and leasehold improvements, then subtracts liabilities. It usually sets a floor value, because it leaves out goodwill and patient relationships. It fits an underperforming practice or a purchase that is mostly equipment or real estate.

Profit-Based Approach

This method starts from the profit the practice produces for the owner after all expenses, then works back to a price from the return you want. For example, a practice that reliably produces $250,000 of owner profit, bought by someone looking for a 25% return, points to a value of about $1 million.

Other Factors That Move The Number

Location matters beyond geography: local demographics, competition, accessibility and lease terms all feed into value. Modern equipment and room to grow add value, while a practice that needs a full remodel is worth less. A specialty service only adds value if someone can keep providing it after the sale. And the seller’s reason for selling should line up with the numbers.

Growing Value Before You Sell

Because value is tied to earnings, every dollar of lasting profit counts more than once. For example, if focused work on your numbers adds $50,000 of annual profit and practices like yours sell at 4 times earnings, that adds roughly $200,000 of value. Tracking the right numbers every month, with an accountant who knows dentistry, is how owners build that value over time.