Question 1

How much is my dental practice worth?

Accepted Answer

Dental practice values typically range from 60-85% of annual collections or 2-4x EBITDA (earnings before interest, taxes, depreciation, and amortization). A practice collecting $1M annually might be worth $600K-$850K. DSOs often pay premium multiples of 4-6x EBITDA for desirable practices.

Question 2

What EBITDA multiple do DSOs pay for dental practices?

Accepted Answer

DSOs typically pay 4-7x EBITDA for dental practices, with larger, more profitable practices commanding higher multiples. A practice with $500K EBITDA might sell for $2M-$3.5M to a DSO. Factors affecting multiples include growth rate, location, patient demographics, and hygiene recall percentage.

Question 3

What factors affect dental practice value?

Accepted Answer

Key factors include: Annual collections and profitability (EBITDA), patient base size and demographics, location and real estate, equipment age and condition, staff tenure and hygiene recall rates, payer mix (fee-for-service vs insurance-heavy), growth trends, and owner dependency. Practices with strong hygiene departments and low owner dependency command premiums.

Question 4

How do I calculate EBITDA for my dental practice?

Accepted Answer

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization + Owner Compensation adjustments. For dental practices, add back owner salary and benefits to normalize earnings. A practice with $200K net income, $300K owner compensation, and $50K depreciation would have approximately $550K adjusted EBITDA.

Question 5

When is the best time to sell a dental practice?

Accepted Answer

The best time to sell is when your practice shows 3-5 years of consistent growth, you're 3-5 years from desired retirement, and market conditions favor sellers. Avoid selling during revenue decline or immediately after losing key staff. DSO acquisition activity tends to be highest when interest rates are favorable.

Dental Practice Valuation Calculator

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How We Calculate Practice Value

EBITDA Multiple Method

Adjustment Factors