What is my dental practice worth?

Three buyers, three different formulas, and on a solo practice they do not converge. Here is each one, with the arithmetic shown.

Three different buyers will look at your practice, and they do not use the same arithmetic. A private buyer prices off collections. A DSO prices off what is left after paying someone to replace you clinically. And an SBA lender — who decides whether either of them can actually pay — prices off debt-service coverage. The three answers can differ by several hundred thousand dollars on the same practice.

This page explains each method, and where the numbers come from.

Method 1 — what a private buyer pays

Dental practices are quoted as a percentage of annual collections, adjusted for profitability. The usual band is 60–85%, and where you land inside it is set almost entirely by one number: earnings before the owner pays themselves.

At 35% earnings before owner pay — a normal healthy solo practice — a $1,000,000 practice prices around $575,000–$725,000. At 42% it moves to roughly $659,000–$809,000. At 25% it falls under $500,000. Every point of overhead you remove is worth roughly 1.2 points of sale price, which is the single highest-return thing most owners can do before listing.

Method 2 — what a DSO pays, and why it is usually less than you expect

A DSO is not buying your income. It is buying the income that remains after it hires someone to do your clinical work. That replacement costs about 30% of your own production.

Run it on a $1,000,000 practice with 30% hygiene and 35% earnings before owner pay: doctor production is $700,000, the associate to replace you costs $210,000, and the earnings a DSO is actually buying fall to $140,000 — fourteen percent of collections.

Most groups will not open a file below roughly $200,000 of adjusted EBITDA. On typical margins that means a practice needs to be collecting well over $1.5M before a DSO process is realistic at all.

And the headline is not the wire. DSO deals commonly hold back 20–30% as rollover equity you cannot sell, and attach a two-to-three year clinical commitment — you keep working, for someone else, in your own operatory.

Method 3 — the bank ceiling nobody puts in the listing

Whatever the comps say, an individual buyer can only pay what a lender will fund. SBA practice acquisition debt is underwritten to a debt-service coverage ratio, typically 1.25×, after leaving the buyer a living allowance.

The chain is short: earnings before owner pay, minus the buyer's living allowance, divided by 1.25, is the annual payment a lender will support. Capitalised over ten years at current rates and grossed up for the buyer's down payment, that is the maximum financeable price.

For a profitable practice this ceiling sits above the comps and never binds. For a tired one it binds hard, and it — not your broker — sets your price. Below roughly 25% earnings before owner pay, no bank funds a buyer at all, and the practice changes hands as a chart base and equipment.

The building is a separate decision, and usually the larger one

At 7% of collections in market rent and a 7.5% capitalisation rate, the building attached to a $1,000,000 practice is worth around $933,000 — frequently more than the practice itself.

Selling it with the practice converts an inflation-linked income stream into one taxable number. Keeping it and leasing it back holds an appreciating asset that pays whether or not the practice thrives, and gives you a second thing to sell later — usually to the same person, once they can afford it. Practices are worth what a bank will lend against them. Buildings are worth what they are worth.

What actually moves your number

• Overhead, two years before you list. It moves the price more than any negotiating tactic, and it compounds through all three methods at once.
• Doctor production, if hygiene is running high. A healthy office is around 30% hygiene. Much above that usually means doctor production has room — and a buyer prices that headroom as their upside, not yours.
• The lease, if you do not own the building. Under five years of remaining term, or no assignment clause, kills a bank-financed sale outright. Fix it before you go to market, not during diligence.
• Clean books. Every add-back you cannot document is an add-back the lender removes.

Where these figures come from

Ranges are market bands, not quotes. The market context in the tool — dentist density, how many owners near you have been in practice since 2007 or earlier, and how consolidated your catchment is — is computed from the CMS National Plan and Provider Enumeration System and ACS 2023 five-year estimates, across 26,149 markets. The consolidation measures are described in the research piece.

This is an explanation of how the market prices practices, not an appraisal, and not investment, tax or legal advice. A real offer turns on your chart base, payer mix, lease, equipment age, staff retention and the quality of your books.