Guide · Updated September 2026
How to value a dental practice
A practice valuation examines sustainable earnings, owner reliance and the assets and liabilities included. The examples here compare illustrative 3–5× adjusted EBITDA and 60–90% of revenue methods separately; they are not market evidence or equivalent measures of value.
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.
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 already deducted from that profit, and replace expensed owner remuneration 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
For this illustration, multiply adjusted EBITDA by 3× to 5×. A formal valuation must support its selected multiple with relevant evidence. 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. Agreement with the EBITDA method does not validate the assumptions or a transaction price.
Step 4 — Reference comparable sales
Finally, weigh the result against what similar practices have actually sold for, assessed for comparability in size, location, date and structure. Convergence alone does not establish value.
Step 5 — Define the assets, liabilities and interest valued
The formal report defines the interest valued, included assets and liabilities, valuation date and purpose. These illustrative methods do not separately establish goodwill or whole-practice value. Do not automatically add equipment, fit-out or stock to the results: that risks double counting.
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
These are separate illustrative ranges; no midpoint is calculated. 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.