Practice valuation

Practice valuation is the process of estimating what a dental practice is genuinely worth to a buyer, as distinct from whatever number a seller or a broker has attached to the listing. A real valuation is built from the practice's actual financial performance (adjusted earnings and collections) run through methods buyers and lenders actually use, not from a multiple of what the seller wishes the practice were worth.

Two methods dominate in general dentistry: a multiple of adjusted EBITDA, and a percentage of trailing annual collections, and the honest approach runs both side by side rather than picking whichever is more flattering. When the two methods land in a similar range, that agreement is a good sign; when they diverge sharply, the disagreement itself is often the finding, usually that overhead or collections are unusual for the practice's revenue in some way worth investigating before going further.

A valuation is a sanity check on a price, not a substitute for full due diligence. It tells a buyer whether an asking price is in a reasonable neighborhood before they spend real money finding out whether it is actually a good practice to buy.