EBITDA multiple

An EBITDA multiple is the factor a valuation applies to a practice's adjusted EBITDA to estimate its price: a practice with $250,000 in adjusted EBITDA valued at a 4× multiple is worth roughly $1 million by this method. Small general dental practices commonly transact somewhere between 3.5 and 5.5 times adjusted EBITDA, with larger, better-systematized or multi-provider practices often commanding the higher end of that range or beyond it.

The multiple itself moves for real reasons: a practice with strong systems that don't depend on the selling doctor, a stable and tenured team, a favorable lease, and diversified revenue not concentrated in one or two procedures all tend to justify a higher multiple, because a buyer is paying for earnings that are more likely to survive the transition intact. A practice heavily dependent on the seller's personal relationships and clinical reputation is a riskier purchase, and the multiple a sophisticated buyer applies should reflect that risk.

Getting the multiple right matters far less than getting the underlying adjusted EBITDA right, since even a well-chosen multiple applied to an inflated earnings number produces a badly inflated price.