A dental practice valuation, done by the dentist before a broker does it, is the practice's earnings times a multiple, with the supplies and the equipment added on their own lines. The earnings are the seller's discretionary earnings: the profit on the books plus the owner's own salary, benefits and the one-off costs added back, because the buyer will run the practice differently. The multiple is the number the dentist was quoted or has in mind, and this hub publishes none. This page works the arithmetic on the hub's own example, $180,000 of discretionary earnings at 2.5, says what a dental practice value calculator has to add for supplies and equipment, and what the rule of thumb is when the dentist applies it. The free small business valuation tool on this site does the sum from your own figures, with no account.
The earnings a dental practice is valued on
Start from the practice's net profit for the last twelve months, then add back what a buyer would not carry: the owner's salary and benefits, interest and depreciation, and one-off costs such as a lawsuit or a move. That is seller's discretionary earnings, and on the hub's example it is $180,000. A dental practice has add-backs the tool handles as inputs: the owner's clinical salary is the largest, and the question of whether an associate would have to be paid to produce the owner's dentistry decides whether it is added back in full. The IRS Schedule C, linked below, is where a sole practitioner's profit is reported; the discretionary earnings are that profit with the add-backs the buyer will not inherit.
How much is my dental practice worth: earnings times your multiple
Value equals discretionary earnings times the multiple you enter. At the tool's default of 2.5, $180,000 is $450,000; at 2.0 it is $360,000, at 3.0 it is $540,000, and the spread between those is the whole negotiation. The multiple is yours: the one a broker quoted, the one an associate was told, the one the last practice on your street changed hands at. This hub publishes no multiple for dentistry, by rule, because a multiple published to rely on is an opinion the hub would be signing, and the American Dental Association is where the profession's own transition guidance lives. The dental practice valuation calculator on this site shows the value at whatever multiple you type and the range around it.
Supplies, equipment and the dental practice value calculator
A dental practice sells with its supplies on hand and its equipment in the operatories, and both are added at cost rather than multiplied. On the hub's example, $36,000 of inventory sold alongside takes $450,000 to $486,000, which is 2.7 dollars for every dollar of earnings once the inventory is in. Equipment is the same line at its agreed value: the chairs, the imaging, the sterilizers, at what the buyer and seller agree they are worth, not at what they cost new. The dental practice value calculator on this site carries inventory as its own line; equipment beyond it is the same addition, and the report shows the earnings value and the additions separately so the buyer can read which is which.
The dental practice valuation rule of thumb, as you apply it
A rule of thumb for a dental practice is a percentage of collections or a multiple of earnings that the profession passes around, and the hub's position is that it is yours to apply and not the hub's to publish. Enter the rule as the multiple, or as a percentage of the last twelve months' collections, and the tool works the value; enter a second rule and it works a second value, and the range between them is the honest answer before a broker or an appraiser signs a figure. The free small business valuation tool on this site does the sum, and the paid plan files each valuation against the practice and the date so the next one shows what changed.
Questions people ask about dental practice valuation
How is a dental practice valued?
Discretionary earnings, the profit plus the owner's salary and the one-off costs added back, times a multiple, plus supplies and equipment at their agreed values. On the hub's example, $180,000 at 2.5 is $450,000, $486,000 with $36,000 of inventory.
What multiple is a dental practice worth?
The hub publishes no multiple. Enter the one you were quoted or have in mind and the calculator shows the value at that multiple and at the ones either side, so the range is on the page before a broker signs a figure.
Is there a free dental practice valuation calculator?
The small business valuation tool on this site works the value from your earnings, your multiple and your inventory, with no account. The paid plan files each valuation against the practice and the date.