Dental Practice Valuation Template

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.

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.