A dental practice is commonly valued by a percentage of annual collections, a multiple of profit, or an appraisal that blends market, income and asset approaches. Published rules of thumb mostly fall around 60% to 85% of collections, and one article puts typical sales at about twice a year's profit. Those are starting points. Two practices collecting the same amount can be worth very different sums, mainly because of profit.
This guide isn't a valuation, and it isn't tax, legal or investment advice. It explains the methods so you can follow the conversation. A dental broker, a CPA or a credentialed appraiser does a real valuation, using your books, your lease and your market. Gigabit sells marketing to dental practices. We don't value, broker or finance practices, and we have no stake in your number. Many of the sources below do sell valuation or transition services, so we say who wrote what.
The common methods
Wipfli describes three broad approaches: market, income and asset (Wipfli). The rules of thumb you hear from colleagues are shortcuts to the first of these.
| Method | How it works | Where it's useful | Where it misleads |
|---|---|---|---|
| Percentage of collections | Average recent collections × a percentage | A quick first look | Ignores overhead, and so profit |
| Multiple of profit | Owner's annual profit × a multiple | Solo and small practices bought by another dentist | Depends on how profit is worked out |
| Multiple of EBITDA | Earnings before interest, tax, depreciation and amortization × a multiple | Larger practices and group buyers | Often after paying a market wage for the dentist, so not your take-home |
| Income approach | Expected future cash flow, adjusted to normal levels and discounted | Formal appraisals | Sensitive to assumptions |
| Market approach | Recent sales of similar practices | When there's good data for your area | Comparable sale data is often private |
| Asset approach | Assets at market value, less liabilities | A floor, and for allocating the price | Misses most of the value, which is intangible |
A formal appraisal may use several. One adviser writing on Dentaltown describes an appraiser estimating market, income and asset values and averaging them (Dentaltown). Your appraiser may weight them differently.
What the published ranges say
Here's what we read on 30 October 2026, with how old each source is and who wrote it. There's no official figure. VantaInsights notes that the ADA's Health Policy Institute doesn't publish sale multiples.
On profit and EBITDA, the sources differ more. Writing for the AGD, Brian Hanks says practices sell for about twice one year's profit (AGD). Benco, which sells valuations, gives 1.5 to 3.5 times EBITDA for average-size practices (Benco). Ad Astra Equity lists higher bands that rise with size: 3 to 5 times adjusted EBITDA under $500,000, up to 9 to 11 times at $3 million to $5 million or more (Ad Astra). It says its page isn't a formal valuation opinion, and that deals can fall outside its bands.
Part of the gap is that these aren't the same measure or the same buyer. VantaInsights explains that owner-operator buyers tend to look at seller's discretionary earnings, while group buyers look at EBITDA after paying a market-rate associate (VantaInsights). A multiple means nothing until you know what it's a multiple of. So when someone quotes you "six times", ask: six times what, and calculated how?
Why the same collections can mean different prices
Wipfli calls the 70–100% rule of thumb potentially highly misleading (Wipfli), and Benco makes the same point with an example: a $1 million practice with 80% overhead in a quiet location may be worth less than a $500,000 practice with 50% overhead in a growing suburb (Benco). Hanks puts it most simply: profit is the main driver of value, and about half of practices sell for less than the average. Here's the same practice on two yardsticks, with example numbers:
| Average annual collections (example) | $1,000,000 |
| Overhead (example) | 70% |
| Owner's annual profit (example) | $300,000 |
| At 65–80% of collections (Dentaltown) | $650,000–$800,000 |
| At about 2× profit (AGD) | $600,000 |
| At 1.7× profit, the figure in AGD's worked example | $510,000 |
That spread is on one practice, on published rules alone, before anyone has read the lease or the patient list. It's why a rule of thumb is fine for a conversation with your spouse and not for signing anything.
What buyers look at
From the sources above, plus what we'd expect a careful buyer to ask. Your broker will have a longer list:
- Profit and overhead, over several years
- Collections trend, and whether it's rising or falling
- Active patients, new patients and how many come back
- Insurance focus and clinical focus
- Share of the work that doesn't depend on the owner, such as hygiene
- Location, whether urban or rural, and the lease or building
- Age of equipment and number of operatories
- Staff, and whether they will stay
- Your plans after the sale
The risk a buyer is pricing is whether the revenue stays once you leave. Wipfli points out that patients may leave with the selling dentist and that the incoming dentist's skills may differ. Bruce Bryen, a CPA, writes that valuation experts commonly allocate 50% to 75% of value to goodwill, split between goodwill tied to you personally and goodwill tied to the practice (Dental Products Report). The more patients are loyal to the practice as well as to you, the easier that is to transfer.
Where marketing honestly fits
We'll be careful here, because this is where someone like us could oversell. We found no source that puts a number on what reviews or marketing add to a sale price, and we won't invent one. No star rating adds a set percentage. What marketing can do is affect things a buyer does check:
- A steady, documented flow of new patients. Being able to show new patients a month, by source, for three years is a better story than "we're busy". Tracking costs almost nothing. Our dental marketing guide shows how.
- Active patients and recall. Buyers care about patients who come back. A working recall system helps the revenue hold up, and it's a real asset you can show. Bryen counts patient records among the things inside goodwill.
- Reviews that name the practice and the team. In our view, reviews that mention the whole team transfer better than ones that only mention you. Recent reviews also matter to patients, and that doesn't stop at a sale. Treat this as reasoning, not research.
- Assets in the practice's name. Bryen lists the phone number and location within goodwill. Make sure the domain, Google profile, ad accounts and phone numbers belong to the practice and can transfer, rather than sitting with an agency or a former employee.
Now the other side. Marketing is a cost, and profit drives value. Spending more just before a sale can lower the profit a buyer sees, unless it clearly brings in more than it costs. If you plan to sell in the next few years, ask your CPA how recent spending will be treated, and look first at the cheap things: answering calls, recall and reviews. Our list of low-cost ideas starts there. Hanks's own example of raising value is about bringing overhead down, not about spending on marketing.
Deal terms can matter as much as the number
Headline price isn't what you keep. A few things to raise early with your advisers:
- Allocation. The IRS treats the sale of a business as a sale of each asset, and buyer and seller generally use the residual method to divide the price, which shows how much goes to goodwill (IRS). That affects tax for both of you, so ask your CPA.
- Who the buyer is. Group buyers and individual dentists may look at different numbers. DSO affiliation among US dentists reached 13% in 2022 (ADA News), so you may well hear from one. Compare what you'd keep and what you'd be required to do after closing, rather than only the multiple.
- Your role afterwards. Whether you stay on, for how long and on what terms all affect value and your life. Ask your attorney about non-competes and your state's rules.
- Fees. Hanks says brokers can charge up to 10% of the price, and seller's coaches typically $25,000 to $50,000. Ask for a written quote.
- Your name. If the practice carries your name, the ADA Code of Ethics (5.G) limits use of the name of a dentist no longer active in the practice to one year, unless the conditions in 5.G.1 are met. State rules may differ.
Getting a real valuation
- 1Gather three to five yearsTax returns, profit and loss statements, collections reports, the lease, equipment list.
- 2Pull patient numbersActive patients, new patients a month by source, recall and hygiene figures.
- 3Talk to your CPAWhich costs are personal or one-off, and how would a buyer see your profit?
- 4Get the valuationFrom a dental broker or credentialed appraiser. Ask how they are paid and which methods they use.
- 5Bring in your attorneyBefore you sign a letter of intent, not after: price, allocation, non-compete, your role after closing.
Ask anyone you're considering how they're paid, whether they'd also act as your broker, what methods they use and how many dental practices they've valued. A valuation from someone who earns a commission on the sale can still be useful, but you should know about the commission. And it's worth getting one years before you plan to sell, because that gives you time to act on what you learn.
