Dental Practice Valuation Template

Start with the Practice Inputs sheet. Pull your trailing twelve-month gross production and net collections from your practice management software — Dentrix, Eaglesoft, Curve Dental, or Open Dental all have production and collections summary reports that feed this directly. You'll need the expense breakdown from your P&L, owner compensation including draws and any personal expenses through the practice, and operational data: active patient count (defined as seen within 24 months), new patients per month for the last 12 months, hygiene recall rate, payer mix percentages, and number of operatories. If your books don't clearly separate lab fees and dental supplies from general overhead, pull those directly from your supply invoices — lab fees and supplies together typically run 10–14% of collections in a well-managed practice, and buyers scrutinize this number closely.

Work through the Collections Multiple and EBITDA Multiple sheets together, then score the Value Drivers Scorecard. The EBITDA normalization requires you to honestly account for all owner compensation — not just the W-2 salary but any additional draws, profit distributions, personal vehicle, phone, and continuing education expenses that are categorized as business costs. The associate replacement wage in the model defaults to $220,000, which is a reasonable midpoint for a full-time general dentist associate with production-based pay; adjust this number to reflect your market, since dentist compensation varies significantly by region. The Value Drivers Scorecard is where practices either earn or lose their premium: payer mix and recall rate are the two factors buyers and DSOs cite most frequently, and the scorecard shows you exactly how each factor affects the final multiple.

Review the Valuation Summary before any conversation with a dental broker, DSO acquisition team, or potential private buyer. Pay attention to the DSO comparison section — if your practice produces $1.2M or more in annual collections with a strong payer mix and growth potential, the DSO path may produce a materially higher total price than selling to a private buyer, even after accounting for employment agreement terms and performance earnouts that DSOs typically attach. The sensitivity table shows the full valuation range so you're not caught off guard by an anchor offer. Most practice owners run the model at two or three different collection scenarios to understand how improvements in collections rate or payer mix affect the exit value — even a 5% shift in collections rate on a $1M gross production practice moves the EBITDA number enough to justify the operational focus.

Dental practice valuations have three reliable inputs: net collections, normalized EBITDA, and the goodwill value of the patient base. The collections multiple — most commonly 60–80% of trailing twelve-month net collections for private-buyer transactions — is the headline number that dental brokers use to set list prices, but it's the EBITDA normalization that determines whether a lender will finance the acquisition and whether a sophisticated buyer will close at that price. A practice collecting $900,000 per year with 35% overhead is a fundamentally different asset than one collecting $900,000 with 58% overhead. Both might be quoted at 70% of collections, but the second practice has a very different EBITDA and will face a much harder time getting an SBA loan approved. Sellers who understand both numbers go into negotiations better prepared.

The most important factor in dental practice valuations today is payer mix — specifically, how much of collections comes from fee-for-service and PPO out-of-network versus deeply discounted in-network PPO or Medicaid reimbursements. Fee-for-service practices collect close to 100% of production, carry higher per-visit production, and generate more discretionary and cosmetic case acceptance. In-network PPO practices that have accepted aggressive write-down contracts may collect 55–65 cents on each production dollar, compressing margins. Buyers price this difference into their offers. A practice with 60% fee-for-service collections will trade at a higher multiple than a near-identical practice with 90% in-network PPO, because the buyer is acquiring the revenue quality as much as the revenue volume. Practices that have been quietly dropping their worst-performing PPO plans for 12–18 months before a sale often see meaningful valuation improvement.

DSO acquisitions have permanently changed the ceiling for dental practice valuations. A solo practice that would have sold for 65–70% of collections to a private buyer five years ago may now attract DSO interest at 75–85% of collections or 5–7x EBITDA if the practice profile fits their expansion model. DSOs are buying market share, production capacity, and associate dentist pipelines — and they pay a premium for practices with multiple operatories, a facility that can support a second provider, and a patient base that the existing staff can retain through the ownership transition. The tradeoff is that most DSO transactions include a multi-year employment agreement requiring the selling dentist to stay on as an associate, and earnout provisions tied to production metrics. Understanding your practice's value in both markets — private sale and DSO acquisition — before engaging either path is the most important preparation a selling dentist can do.