Dental Practice EBITDA Valuation

Size up a dental practice sale price using the numbers buyers care about. Provide annual collections, the EBITDA margin you can support with financials, and a market multiple to convert normalized EBITDA into enterprise value. Layer in owner add-backs to see how discretionary spending lifts the valuation benchmark.

Total practice collections over the most recent 12-month period before adjustments.
Normalized EBITDA margin as a percent of collections after removing one-time items.
Purchase price multiple from comparable dental platform transactions or lender guidance.
Discretionary expenses removed from EBITDA, such as above-market doctor comp, family payroll, or personal perks.

For indicative valuation only. Engage transaction advisors, tax counsel, and lenders before relying on any figure for offers or financing.

Examples

  • $1,800,000 collections, 22% margin, 4.75× multiple, $120,000 add-backs ⇒ Baseline EBITDA at 22.00% margin: $396,000.00 USD. Normalized EBITDA after add-backs: $516,000.00 USD. Valuation at 4.75×: $2,451,000.00 USD (136.17% of collections). Owner adjustments contributed $120,000.00 USD to normalized EBITDA.
  • $2,400,000 collections, 28% margin, 5.50× multiple, no add-backs ⇒ Baseline EBITDA at 28.00% margin: $672,000.00 USD. Normalized EBITDA after add-backs: $672,000.00 USD. Valuation at 5.50×: $3,696,000.00 USD (154.00% of collections).

FAQ

How should I treat doctor compensation in the margin?

Use market-rate compensation for producing dentists and hygienists before calculating EBITDA. Excess pay to an owner-doctor can be added back in the optional field so the valuation reflects normalized staffing costs.

Can I include capital expenditures in the multiple?

No. Keep EBITDA purely operational. Buyers typically reserve capex for a separate discussion or adjust the multiple if significant reinvestment is required.

What if multiple buyers quote different multiples?

Run the calculator for each term sheet. Comparing valuations at 4.5× versus 5.0× quickly shows how much negotiating room each bidder offers.

Does this account for earn-outs or holdbacks?

The output is an all-cash headline valuation. Model contingent consideration separately or use the M&A earn-out calculator to layer performance-based payments on top.

Additional Information

  • Collections represent gross production net of typical contractual adjustments; use a trailing-twelve-month period aligned with buyer diligence.
  • Apply a multiple sourced from regional DSOs, broker comps, or lender term sheets to stay aligned with underwriting reality.
  • Owner add-backs should be fully documented so buyers and banks accept the adjustments during quality-of-earnings reviews.
  • Result expresses enterprise value in USD; subtract debt and add cash to estimate equity proceeds.

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