Whether you’re buying, selling, or just planning ahead, understanding practice value is fundamental. Here are the methods used and, more importantly, what actually drives the number.
What methods are used to value a dental practice?
The most common approaches are an earnings-based method (a multiple of adjusted earnings or EBITDA) and a percentage-of-collections method. Asset-based approaches also exist. Each is a lens; a credible view usually triangulates more than one.
What drives a practice’s value?
- Profitability — earnings after a market-rate salary and real overhead.
- Durability of collections and a healthy, diversified patient base.
- Hygiene program strength and recurring revenue.
- Systems, staff stability, and how dependent the practice is on the owner.
- Location, equipment condition, and growth potential.
Evaluation for planning vs. a certified valuation
A financial evaluation helps you make buying, selling, or planning decisions. A certified valuation opinion — often required for lending or legal purposes — is prepared by a credentialed valuation professional. They’re different tools; know which one your situation calls for.
Frequently asked questions
Multiples vary by profitability, specialty, size, and market, so a single figure is misleading. What matters is durable earnings after a market salary and real overhead.
Generally by improving profitability, strengthening hygiene and recurring revenue, stabilizing staff, and reducing owner dependence — ideally over a few years. See our selling guide.
Founder & Financial Planner · Investment Adviser Representative · Series 63 & 65
Ian McGinnis is the founder of Dental Wealth Partners and a fee-only financial planner dedicated to dentists. As an investment adviser representative (Series 63 and 65), he built the firm to give dentists coordinated, fiduciary advice across their practice, taxes, investments, retirement plans, and long-term goals — the whole picture in one strategy. A graduate of Belhaven University, Ian previously worked at Davis Private Wealth, MML Investors Services, and Northwestern Mutual, and is based in the Jackson, Mississippi area. He is the author of The Wealthy Dentist and hosts the Smiles & Cents podcast.
Keep reading
- Selling your dental practice: process, timing, and taxesWhat to expect when selling a dental practice — how to prepare, evaluate buyers and deal structures, and plan for the tax impact.
- How much does it cost to buy a dental practice?What dental practices sell for, how prices are calculated, and how to tell whether an asking price is reasonable for your situation.
- How to buy a dental practice: a financial due-diligence guideThe financial due diligence every dentist should do before buying a practice — testing the price, modeling cash flow, and preparing for lenders.