Dental Practice Valuation Calculator
Dental practices have unique valuation factors. Calculate practice value for sale, acquisition, or partnership decisions.
How the Dental Practice Valuation Calculator works
Analyze practice with collections, EBITDA, patient base, and equipment. Calculate value using industry multiples, asset approaches, and cash flow analysis specific to dental practices.
Dental practice valuation requires specialized knowledge. This calculator applies dental-specific multiples and adjustments for accurate valuations.
How it works
Tutorial
Dental practice owners spend decades building their business only to leave money on the table during sale because they don’t understand valuation methodology. Unlike retail or manufacturing businesses, dental practices have unique value drivers: patient retention rates, production per provider, hygiene profitability, and payor mix. A practice collecting $1.5M annually might be worth anywhere from $900K to $1.35M depending on these factors—that’s a $450K difference based on proper valuation.
Whether you’re buying your first practice, adding a partner, or planning retirement, accurate valuation protects your interests. Buyers need to avoid overpaying for a practice with hidden problems like aging patient demographics or insurance-dependent revenue. Sellers need to maximize value by understanding which metrics drive multiples. This calculator applies dental-specific valuation methods used by practice brokers and dental CPAs to determine fair market value.
The Basic Formula
| Method | Formula | Typical Range |
|---|---|---|
| Collections Multiple | Value = Annual Collections × Multiple | 60-90% of collections |
| EBITDA Multiple | Value = EBITDA × Multiple | 3-5x EBITDA |
| Weighted Average | Value = (Collections Method × 40%) + (EBITDA Method × 60%) | Combined approach |
| Asset Adjustment | Final Value = Base Value + Equipment FMV – Liabilities | Adds tangible assets |
Step-by-Step Calculation
Example: General practice with $1,200,000 annual collections, $420,000 EBITDA (35% margin), $150,000 equipment value, strong patient base, 70% PPO/30% FFS
Step 1: Collections-Based Valuation
| Factor | Assessment | Multiple Impact |
|---|---|---|
| Base Collections | $1,200,000 annual | 70% base multiple |
| Payor Mix (30% FFS) | Above average fee-for-service | +5% |
| Patient Retention | Strong active patient base | +5% |
| Growth Trend | Stable last 3 years | 0% |
| Applied Multiple | 70% + 10% adjustments | 80% |
| Collections Value | $1,200,000 × 0.80 | $960,000 |
Step 2: EBITDA-Based Valuation
| Component | Calculation | Amount |
|---|---|---|
| Base EBITDA | Reported | $420,000 |
| Owner Compensation Adjustment | $250,000 paid – $180,000 market rate | +$70,000 |
| Adjusted EBITDA | $420,000 + $70,000 | $490,000 |
| Base Multiple | General practice, established | 4.0x |
| Multiple Adjustments | Strong margins (+0.2x), PPO risk (-0.2x) | 4.0x |
| EBITDA Value | $490,000 × 4.0 | $1,960,000 |
Step 3: Weighted Final Valuation
| Method | Value | Weight | Weighted Value |
|---|---|---|---|
| Collections Method | $960,000 | 40% | $384,000 |
| EBITDA Method | $1,960,000 | 60% | $1,176,000 |
| Base Business Value | Sum of weighted values | $1,560,000 | |
| Equipment (FMV) | Included in base | $0 | |
| Real Estate | Not included (lease) | $0 | |
| Final Practice Value | Total Valuation | $1,560,000 | |
What This Means
This dental practice is worth approximately $1.56 million, which represents 130% of annual collections and 3.2x adjusted EBITDA—right in the sweet spot for a well-run general practice. The EBITDA multiple value ($1.96M) is significantly higher than the collections value ($960K) because this practice has strong profitability margins at 35%. Most practices run 30-32%, so the premium reflects operational excellence.
The 70% PPO payor mix is a concern that prevents a higher multiple—practices with 50%+ fee-for-service command premium valuations because they have pricing power. However, the strong patient retention and stable collections mitigate this risk. For a buyer, this practice offers immediate $490K+ cash flow; for the seller, retiring with $1.56M after decades of work represents solid value if the practice was started from scratch or purchased for significantly less years ago.
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