How buyers value a dental practice and what it takes to prepare for a sale.
Estimated Read Time: 7 minutes
Selling your dental practice can raise a big question: what is it actually worth? EBITDA certainly matters, but the final price depends on more than one number. Understanding what buyers look for can help you set expectations before negotiations begin.
This guide explains what affects a dental practice valuation and what to expect from the first conversation through closing.
Buyers price a dental practice based on adjusted EBITDA. This means two practices with the same revenue can command very different valuations once a buyer adjusts the earnings. Owner compensation often creates the biggest adjustment, though other items like one-time expenses, new providers, or reimbursement rate changes can also impact EBITDA.
Generally, EBITDA shows what the practice generates after ordinary operating costs. Buyers rely on it to set prices because revenue alone does not show how efficient a practice is and much cash it produces.
General dentistry practices in the DSO market commonly trade within the ranges below. The final multiple can depend on the practice’s size, location, risk profile, and strength of its systems.
| Category | Large Practices and Platforms (EV/EBITDA) | Add-On (EV/EBITDA) | Typical Revenue Multiple |
| General dentistry / DSO | 9–11× | 5–8× | ~1.0–1.8× |
Source: works cited combined with guidance from internal bankers, based generally on knowledge and experience. Actual pricing varies with each transaction based on many factors. Intended for educational purposes only and not a guarantee of any outcome.
Owner involvement matters when buyers decide where a practice fits within the range. A single-location practice that relies heavily on its owner may fall toward the lower end. A multi-location practice with multiple partners and associate providers may support a higher multiple.
The work you do before a sale can affect what a buyer sees in your numbers. Small changes can strengthen your earnings and make the practice more attractive. Here are some steps you can take:
Clean Up Your Financials |
| Remove personal expenses and adjust owner compensation to market rate pay, so buyers see the practice’s true earnings. |
Document Your Systems |
| Document key policies, procedures, and employee roles. Note what vendors are used for which functions. The goal is to make your practice a durable system, rather than something dependent on your day-to-day involvement. |
Reduce Owner Dependence |
| Shift production toward associates and hygienists so buyers pay for the business, not just your personal production. |
Improve Compliance |
| Keep OSHA records and credentialing files current so buyers can review them without chasing down missing information. |
Who buys your practice can affect valuation, deal terms, and what happens after closing. Platform buyers, who are looking to start an entirely new DSO around your practice, typically want a very large organization that can anchor a growing dental group. Established infrastructure and provider depth are important, and buyers often value a seller who is willing to lead and grow the new DSO. An add-on buyer already has that infrastructure in place and looks for profitable, well-run practices that fit into its existing group.
The difference matters if you plan to stay after the sale. A platform deal may come with a larger leadership role. Sometimes, larger successful practices can achieve platform multiples even when joining an existing DSO as “add-ons” – so, the valuation categories are not mutually exclusive.
| Feature | Platform Acquisition | Add-On Acquisition |
| Typical multiple | 9–11× EBITDA | 5–8× EBITDA |
| Practice profile | Larger groups with established leadership | Practices that fit into an existing DSO |
| What the buyer wants | A strong base for future growth | A practice that fits its existing operations |
Source: works cited combined with guidance from internal bankers, based generally on knowledge and experience. Actual pricing varies with each transaction based on many factors. Intended for educational purposes only and not a guarantee of any outcome.
At FOCUS, our target deal timeline is six months.The biggest time commitment often comes during diligence, when the buyer checks the financials and other details behind the initial offer. Knowing what happens at each stage makes the timeline easier to plan around.
| Phase | What Happens |
| Valuation and positioning | Your advisor reviews the financials and practice operations to determine where the practice fits within current market ranges. Marketing materials are created to tell a compelling story to buyers along with the information they need to understand the opportunity. |
| Buyer outreach | Your advisor contacts potential buyers and works to create interest in the practice. Interested parties sign NDAs and have the opportunity to review information and speak with your advisory team. |
| Bidding and Negotiation | Buyers submit offers per a structured timeline, often in multiple rounds of bidding and negotiation. You will work with your advisory team to choose and negotiate a final offer. This is memorialized in a “Letter of Intent”, which forms the outline of your deal. |
| Diligence | The buyer reviews financial records, provider contracts, and other practice details before finalizing the deal. |
| Legal Documents and Closing | Many legal agreements are involved in dental practice transactions, especially with DSOs. Your legal team reviews, negotiates, and finalizes these agreements, and the transaction closes. |
Most selling dentists remain clinically involved post-transaction, though your ongoing role will depend on the deal and the buyer’s plans. Generally, practices forming a new DSO will see additional leadership opportunities with growth through new partnerships as a priority.
Making mistakes during a sale can make your practice less attractive to buyers and affect the final price. Here are some things to avoid:
| Mistake | Effect on Value |
| Going to market with unclean financials | Buyers may lower their offer when they cannot verify the numbers or uncover negative adjustments later in the diligence process. |
| Talking to only one buyer | You lose the leverage that comes from having more than one interested buyer bidding in a structured and competitive environment. |
| Waiting until the last minute to prepare | Reviewing major items with your advisor before going to market can uncover potential issues and give you time to plan and prepare. It is also an opportunity to consider your strengths and growth trajectory, and market those items effectively. |
| Staying too involved in daily production | Concentrated production in a single owner introduces key man risk. |
FOCUS has guided more than 30 healthcare provider transactions over the past six years. If you are considering a sale, our team can walk you through how buyers may value your practice and what a transaction could look like. Talk to our team to get a clear picture of your practice’s value.
Connect with FOCUS
Eric Yetter
Managing Director
Managing Director
Whether you’re exploring a sale, raising capital, or simply want an outside perspective on where your business stands, our bankers are ready to listen. Reach out to start a confidential conversation with the FOCUS team.
