Valuation methodology
Dental practice valuation in Australia
Understand sustainable earnings, the interest being valued and the risks that matter for a sale, purchase or partner change. A formal valuation documents the evidence and assumptions for your specific purpose.
The calculator and worked examples use illustrative assumptions of 3–5× adjusted EBITDA and 60–90% of revenue. They are not verified market evidence, a recommended transaction price or a standalone goodwill valuation.
What the valuation of a dental practice involves
The starting point is your profit — but not the profit on your tax return. A valuer normalises earnings to show what a new owner would actually make: adding back one-off and non-business costs, and replacing owner remuneration already deducted in that profit with a market-rate wage for the clinical work they perform. The result is adjusted EBITDA (earnings before interest, tax, depreciation and amortisation), which is then multiplied by a market multiple to give the practice's going-concern value.
The methods, and why we use more than one
1. Capitalisation of adjusted EBITDA (primary). Adjusted EBITDA × a multiple supported by the engagement evidence. Our calculator uses an illustrative 3×–5×; this is not a verified market range.
2. Percentage of gross fees (cross-check). A faster sense-check valuing the practice at roughly 60%–90% of annual gross fees. It ignores your margin. Agreement with the EBITDA result does not validate either assumption or a transaction price.
3. Comparable sales. What similar practices have actually sold for, assessed for comparability in size, location, date and structure. Apparent agreement between methods alone is not evidence of value.
What moves your multiple — up or down
- Owner reliance — the single biggest driver. If the profit walks out the door with you, buyers discount heavily.
- Associates & hygiene revenue — profit from employed clinicians is worth more than profit from the owner.
- Lease — a long, assignable lease on fair terms protects value; a short or uncertain one erodes it.
- Location & competition — catchment demographics, growth, and the density of nearby practices.
- Systems & records — clean financials, documented processes and stable staff reduce buyer risk.
- Equipment & fit-out — modern, well-maintained surgeries versus deferred capital spend.
Goodwill and tangible assets
A formal report defines the interest valued, included assets and liabilities, valuation date and purpose. The illustrative calculations below do not separately establish goodwill or whole-practice value. Equipment, fit-out and stock must not automatically be added: that can double count assets already reflected in earnings.
A worked example
Consider a suburban practice with:
- Annual gross fees: $1,200,000
- Adjusted EBITDA (after a market-rate owner wage): $360,000 — a 30% margin
Applying both methods:
- EBITDA method: $360,000 × 3–5 = $1.08M – $1.8M
- Gross-fees method: $1,200,000 × 60–90% = $720k – $1.08M
These illustrative methods give separate ranges. They meet at $1.08M, but that does not establish a central value. No averaging or automatic asset addition is justified. Try it with your own figures →
Valuation by purpose
The right approach depends on why you need the valuation — see all valuation purposes:
- Family law settlement
- Buy-in or buy-out
- ATO / Small Business CGT concession
- Expert witness / dispute
Estimate vs formal valuation
Our practice value calculator applies the multiples above to your headline figures — a genuine starting point. But it can't read your lease, meet your team, or assess your patient base. A formal valuation does, and produces a documented report that buyers, banks, courts and the ATO take seriously.
Frequently asked questions
How is a dental practice valued in Australia?
Our calculator uses illustrative assumptions of 3–5× adjusted EBITDA and, separately, 60–90% of revenue. These are not equivalent ranges or verified transaction evidence. A formal valuation selects methods and assumptions for the practice and purpose.
What multiple do dental practices sell for?
Our calculator uses illustrative assumptions of 3–5× adjusted EBITDA and, separately, 60–90% of revenue. These are not equivalent ranges or verified transaction evidence. A formal valuation selects methods and assumptions for the practice and purpose.
Is goodwill included in the valuation?
A formal report defines the interest valued and the assets and liabilities included. Our calculator does not separately value goodwill or automatically add equipment, fit-out or stock; doing so could double count value.
How long does a valuation take?
Timing depends on the report purpose, the complexity of your practice and the information available. Tell us about any deadline when requesting a quote so we can discuss the scope and timing with you.
When do you need a valuation of a dental practice?
Most often for a sale or purchase, a partner buy-in or buy-out, a family-law property settlement, an ATO or CGT market valuation, bank finance, or a dispute requiring expert evidence. The method is broadly the same; the standard of documentation and independence each purpose demands is not.
Do you value orthodontic and other specialist dental practices?
Tell us your specialty and the purpose of the valuation when requesting a quote. We will confirm whether we can assist and the scope required, including any referral-source concentration or transferability issues.
How accurate is an online estimate?
It's a useful starting range, not a valuation — it can't see your lease, staff, patients or equipment. Treat it as a sense-check, then commission a formal report.
General information only, not financial or valuation advice.