Dental Practice Valuation Calculator
Calculate what your dental practice is worth for sale, acquisition, or partnership decisions.
How the Dental Practice Valuation Calculator works
Enter your collections, EBITDA, patient base, and equipment details. The calculator uses dental-specific multiples and adjustments to determine fair market value.
Dental practices have unique value drivers that differ from other businesses. This calculator applies specialized methods used by dental brokers and CPAs to give you accurate valuations.
How it works
Tutorial
Dental practice owners often leave money on the table during sales because they don’t understand valuation methodology. Unlike other businesses, dental practices have unique value drivers: patient retention, production per provider, hygiene profitability, and insurance 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.
Whether you’re buying your first practice, adding a partner, or planning retirement, accurate valuation protects your interests. Buyers need to avoid overpaying for practices with hidden problems like aging patients or too much insurance dependence. Sellers need to maximize value by understanding which metrics drive higher multiples. This calculator applies dental-specific methods used by practice brokers and dental CPAs.
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 Value – 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% insurance/30% private pay
Step 1: Collections-Based Valuation
| Factor | Assessment | Multiple Impact |
|---|---|---|
| Base Collections | $1,200,000 annual | 70% base multiple |
| Insurance Mix (30% private pay) | Above average private pay | +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), insurance 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 (included in base) | Already factored in | $0 | |
| Real Estate (lease) | Not included | $0 | |
| Final Practice Value | Total Valuation | $1,560,000 | |
What This Means
This dental practice is worth approximately $1.56 million, which equals 130% of annual collections and 3.2x adjusted EBITDA-right in the target range for a well-run general practice. The EBITDA value ($1.96M) is significantly higher than the collections value ($960K) because this practice has strong profit margins at 35%. Most practices run 30-32%, so this premium reflects excellent operations.
The 70% insurance mix is a concern that limits the multiple-practices with 50%+ private pay command premium valuations because they control pricing. However, strong patient retention and stable collections help offset this risk. For a buyer, this practice offers immediate $490K+ cash flow. For the seller retiring, $1.56M represents solid value if the practice was started from scratch or purchased for less years ago.
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