Dental practice valuation

The worked example

The four chair practice from our dental worked example turns over $2.0 million. The owner is one of its two dentists and produces $760,000 of fees, 38 per cent of the practice, drawing a salary of $200,000. The accounts show profit before interest, tax, depreciation and amortisation of $398,000, after $6,000 of personal car and phone costs run through the practice.

A buyer would pay an associate 40 per cent of the owner's fees, $304,000, to do that clinical work, so maintainable earnings are $300,000, the figure our dental worked example starts from. With four surgeries and the principal producing under 40 per cent of fees, the practice sits in the group practice band, 3.5x to 4.5x, or $1,050,000 to $1,350,000. A ten year lease with options works for it, and a weak recall rate, with fewer than half of patients due for recall rebooking within three months, works against it, so the answers point to the middle third: $1,140,000 to $1,260,000.

If the principal's share fell under 35 per cent of billings, the practice would also meet the criteria corporate buyers use, and the tool would show the corporate case beside the range.

Illustrative example, built from typical figures for a practice of this kind, not a client engagement. The fees, salary and profit are assumptions.

How to read the result

The range

The headline is the third of the band your answers point to. The band range shows the full span for practices of your size and structure, and What moves it names the answers behind the third.

Solo or principal led, 2.5x to 3.5x

Under three surgeries, or a principal who produces more than 40 per cent of fees. Much of the value follows the principal, so buyers pay less for it.

Group practice, 3.5x to 4.5x

Three or more surgeries and a principal who produces 40 per cent or less. A strong recall system, settled associates, good equipment and a long lease move a practice up the band.

If a corporate group buys, 5.5x to 6.5x

Shown only when the practice has three or more surgeries, the principal produces under 35 per cent of billings and maintainable earnings are $200,000 or more, the criteria corporate groups use. Part of the price is usually deferred over an earn out and the dentists are tied in, so compare offers on what you receive at settlement and what you must do to earn the rest.

No earnings based value

When the market wage and the adjustments take maintainable earnings to zero or below, a buyer pays little for goodwill, and the value rests on equipment, fit out and the patient list.

Larger practices

Above about $2 million of maintainable earnings, practices sold through a formal process can sit above these bands, and a comprehensive valuation is the right next step.

Questions owners ask

Why is the value lower than my profit suggests?

Your profit includes your own clinical work. A buyer has to pay a dentist to do it, usually as an associate on a share of fees, so the multiple applies to what is left after that market wage.

What share do associates take?

Business Valuations Brisbane puts associate fees at 35 to 45 per cent of billings. If your associates are paid on fees after laboratory costs, enter your own fees after laboratory costs so the comparison holds.

What do corporate buyers look for?

In BDO's September 2025 review, corporate groups generally looked for at least three surgeries, a principal producing under 35 per cent of billings and $200,000 or more of EBITDA, and usually paid 75 to 80 per cent at settlement with the rest over a three to four year earn out.

Does equipment age matter?

Buyers pay for chairs, imaging and fit out in working order. Items due for replacement soon come off the price, which is why ageing equipment works against the practice in the answers.

What about rules of thumb based on fees?

Rules of thumb based on a share of gross fees still circulate. Buyers and lenders work from maintainable earnings, because two practices with the same fees can carry very different costs and reliance on the principal.

When do I need a formal valuation?

For a sale, a partner joining or leaving, finance or a family law matter, the other side will want a valuation it can rely on. Our indicative valuation starts from $4,500 and a comprehensive valuation from $13,500.

Typical results

For a practice with $300,000 of maintainable earnings, the bands give $750,000 to $1,050,000 when it is solo or principal led and $1,050,000 to $1,350,000 as a group practice, and $1,650,000 to $1,950,000 if a corporate group buys. Moving from solo or principal led to a group practice lifts the middle of the range from 3.0x to 4.0x, about $300,000 at these earnings.