Guide · Updated July 2026
How to value a dental practice
To value a dental practice, capitalise its adjusted EBITDA at a multiple of about 3× to 5×, then cross-check the result against 60–90% of annual gross fees and recent comparable sales. Using more than one method — rather than a single rule of thumb — is what produces a number you can defend.
Step 1 — Work out adjusted EBITDA (future maintainable earnings)
Start with the practice's profit and normalise it: add back one-off and non-business costs, and replace the owner-dentist's drawings with a market-rate wage for their clinical work. The result — adjusted EBITDA — represents what a new owner could sustainably earn, and is the foundation every method builds on. This step is where most DIY valuations go wrong: see the add-backs and the owner-wage adjustment worked through in full.
Step 2 — Apply the primary method: capitalise EBITDA
Multiply adjusted EBITDA by a market multiple, commonly 3× to 5× for Australian dental practices. The multiple reflects risk: how much of the profit would survive the current owner leaving. See our guide to dental practice sale multiples for what sits at each end of the range.
Step 3 — Cross-check against gross fees
As a sanity check, value the practice at roughly 60–90% of annual gross fees. It ignores your margin, so it's crude — but when it broadly agrees with the EBITDA result, the range is trustworthy.
Step 4 — Reference comparable sales
Finally, weigh the result against what similar practices have actually sold for, adjusted for size, location and structure. Three methods converging on a similar figure is far more persuasive than one.
Step 5 — Add tangible assets and account for goodwill
The multiple already captures goodwill and going-concern value. Equipment, fit-out and stock are then valued separately and added, depending on whether the deal is a share sale or an asset sale.
A worked example
A practice with $1,200,000 in gross fees and $360,000 adjusted EBITDA (a 30% margin):
- EBITDA method: $360,000 × 3–5 = $1.08M – $1.8M
- Gross-fees method: $1,200,000 × 60–90% = $720k – $1.08M
A central estimate lands near $1.0M–$1.1M. Try it with your figures →
The most common mistake: a single rule of thumb
"Practices sell for X% of fees" is a starting point, not a valuation. It ignores margin, owner reliance, lease and location — the very things that decide value. A credible valuation triangulates several methods and explains its assumptions.
Why you need the valuation changes what's required
The method above is broadly the same whatever the purpose. What changes is the standard of documentation — and the independence — the reader expects. See all valuation purposes, or go straight to the one you need:
- Family law settlement — court-ready and independent
- Buy-in or buy-out — a partner's share, fair to both sides
- ATO / CGT market valuation — to the standard the ATO expects
- Expert witness — with a duty to the court
Frequently asked questions
What is the best method to value a dental practice?
Capitalising adjusted EBITDA is the primary method used by buyers and professional valuers, cross-checked against a percentage of gross fees and comparable sales. Relying on a single rule of thumb is the most common mistake.
What is future maintainable earnings (FME)?
FME is the sustainable, normalised profit a new owner could reasonably expect to earn — the basis for the multiple. For a practice it is essentially adjusted EBITDA after a market-rate owner wage.
Can I value my own dental practice?
You can estimate it with the methods here or an online calculator, but a formal valuation for a sale, court, finance or the ATO should be prepared independently so it holds up to scrutiny.
Ready to go further? Read how the valuation of a dental practice works, or request one.
General information only, not financial or valuation advice.