Whether you're planning to sell, bring on a partner, or just want to know where you stand, understanding your practice's value is essential. Here's how dental practices are valued in today's market.
Valuation Methods
1. Percentage of Collections
The simplest method: practice value = percentage of annual collections.
- General practices: 65-85% of collections
- Specialty practices: 70-100% of collections
- When it's used: Quick estimates, smaller practices
2. EBITDA Multiple
More sophisticated: value = EBITDA x multiple.
- EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization
- Adjusted EBITDA: Add back owner compensation, one-time expenses
- Multiple range: 4-8x for most practices
3. Discounted Cash Flow
Projects future cash flows and discounts to present value. More common for larger practices or DSO acquisitions.
5-7x
Typical EBITDA multiple for general dental practices
Source: Dental practice transaction data 2025
Current Market Multiples
| Practice Type | Collections Multiple | EBITDA Multiple |
|---|---|---|
| General (solo) | 65-75% | 4-5x |
| General (group) | 70-85% | 5-7x |
| Orthodontics | 75-90% | 5-8x |
| Oral Surgery | 80-100% | 6-8x |
| Periodontics | 70-85% | 5-7x |
| Pediatric | 75-90% | 5-7x |
Note: Multiples vary significantly by region, practice size, and market conditions. These are general ranges—actual valuations require detailed analysis.
What Drives Value Up
Financial Factors
- Consistent growth - 5%+ annual revenue growth
- Strong margins - 35%+ EBITDA margin
- Diversified revenue - Not dependent on one procedure or payor
- Low AR - Under 30 days average
- Clean financials - Accurate, well-documented records
Patient Factors
- Active patient base - High percentage seen in last 18 months
- New patient flow - Consistent 30+ new patients/month
- Low attrition - High retention rates
- Insurance mix - Fee-for-service and good PPO mix
Operational Factors
- Documented systems - Processes don't depend on owner
- Strong team - Stable, skilled staff willing to stay
- Modern equipment - Well-maintained, up-to-date
- Good location - Visible, accessible, room to grow
- Transferable lease - Favorable terms, long remaining term
Digital Factors
- Strong online reputation - 4.5+ stars, many reviews
- Website quality - Modern, mobile-optimized
- SEO presence - Ranks well for local searches
- Social media presence - Active, engaged following
What Drives Value Down
- Owner-dependent - Production tied to selling dentist
- Declining metrics - Falling revenue, patients, or production
- Staff turnover - High turnover or key departures
- Poor online reputation - Low ratings, negative reviews
- Deferred maintenance - Aging equipment, facility issues
- Lease problems - Short term, unfavorable conditions
- Heavy Medicaid mix - Lower reimbursement rates
- Legal or compliance issues - Outstanding claims or violations
Red Flag: Practices where 70%+ of production comes from the selling dentist are harder to sell at full value. Buyers worry patients will leave when the dentist does.
Preparing to Sell (2-3 Years Out)
Year 1: Foundation
- Clean up financials and documentation
- Address deferred maintenance
- Build management systems that don't require you
- Start improving online reputation
Year 2: Growth
- Focus on growing new patients and production
- Hire associate to reduce owner dependency
- Renegotiate or extend lease
- Upgrade technology if needed
Year 3: Polish
- Maximize profitability (cut unnecessary expenses)
- Ensure strong trailing 12-month numbers
- Document all systems and procedures
- Get preliminary valuation
Dentplicity Insight: Your online reputation directly impacts practice value. We help you build and maintain the digital presence that buyers look for. Start free.
The Bottom Line
Practice valuation isn't just for selling—it's a scorecard for practice health. The factors that increase value are the same ones that make your practice more profitable and enjoyable to run. Focus on them whether you're selling tomorrow or in twenty years.
