By Joey N. Friedman, CPA, ABV, M.Acc, MIB — President, Joey Friedman, CPA, P.A.
Quick answer: A dental practice is valued one of two ways, depending on the buyer. An individual dentist often prices a general practice at roughly 65 to 75 percent of annual collections. Institutional buyers — dental service organizations (DSOs) and private equity — instead apply a multiple of normalized EBITDA, after the owner’s pay is replaced with a market associate-dentist’s salary. Those multiples scale with size: a single-location practice commonly trades around 5 to 8 times EBITDA, larger multi-location platforms reach 8 to 12 times, and specialty practices generally command more than general dentistry. As with any professional practice, a dentist’s personal goodwill is generally not a divisible marital asset in a Florida divorce.
Dentistry has split into two valuation markets, and a practice can be worth meaningfully different amounts in each. The dentist down the street and a national DSO value the same office using different yardsticks. A credentialed valuation analyst determines which standard applies and what the practice is genuinely worth under it.
Two methods, two buyer worlds
For decades, dental practices were priced on a percentage of annual collections — a general practice commonly at 65 to 75 percent. That approach is still common in dentist-to-dentist sales because it is simple and familiar. But it measures revenue, not profit, and it is not how institutional buyers think.
DSOs and private equity groups value a practice on a multiple of EBITDA — earnings before interest, taxes, depreciation, and amortization. The decisive adjustment, as with any owner-operated practice, is normalizing the owner-dentist’s compensation: the owner’s pay is replaced with a market salary for the clinical dentistry actually performed, which isolates the practice’s true operating profit. Profitability, not raw collections, drives the institutional number — a higher-margin practice can outvalue a larger but less profitable one.
The two approaches answer different questions, and a sound valuation considers both alongside the standard income, market, and asset methods explained in our overview of business valuation.
EBITDA, margin, and the size-tier multiple ladder
Two numbers determine the institutional value: the EBITDA itself and the multiple applied to it.
The EBITDA margin — EBITDA as a percentage of collections — typically runs about 15 to 20 percent, and a margin at or above 20 percent is regarded as investment-grade and draws the strongest interest. Below roughly 15 percent, buyers tend to discount or pass.
The multiple rises with size, because larger practices are more valuable to a consolidator:
- Under about $1 million of EBITDA: roughly 5 to 7 times (a single-location add-on or “tuck-in”).
- About $1 to $3 million: roughly 7 to 9 times (a regional add-on).
- About $3 to $5 million: roughly 9 to 11 times (an emerging platform).
- Above about $5 million: roughly 10 to 12 times (a platform-grade transaction).
A small general practice sold to an individual dentist, by contrast, often transacts nearer 3.5 to 4.5 times EBITDA — a reminder that the buyer, not just the practice, sets the multiple.
The DSO effect: multiple arbitrage
The reason a practice can be worth more to a DSO than to a neighboring dentist is multiple arbitrage. When a practice is folded into a larger group, its earnings are revalued at the group’s higher platform multiple — the value rises simply by being aggregated, independent of any operational change. This dynamic, the same force reshaping veterinary and other professional-practice markets, is why institutional multiples sit well above traditional dentist-to-dentist pricing for practices large enough to be attractive.
Specialty versus general practice
Specialty practices generally outvalue general dentistry because their revenue is stickier and their referral networks are harder to replicate. Reported ranges place orthodontics near the top (case-based, recurring revenue), with oral and maxillofacial surgery and endodontics also commanding premiums; pediatric dentistry can be capped where Medicaid exposure is high. General dentistry sits at the lower end of the institutional range at a single location. As the general market has grown crowded, consolidation has moved aggressively into these specialties.
What drives a dental practice’s value
Beyond size and margin, an analyst evaluates the qualitative factors that set the multiple:
- Collections trend and payer mix. Fee-for-service and in-network PPO revenue is valued more favorably than heavy Medicaid exposure.
- Profitability and overhead control, which determine the EBITDA margin.
- Provider model. A practice whose production is spread across associates and a strong hygiene program is less owner-dependent — and therefore less risky — than one built around the selling dentist.
- Operatories, equipment, and technology (for example, CBCT or CAD/CAM), and the condition and capacity they represent.
- Single versus multi-location, since scale drives the multiple.
Personal versus enterprise goodwill
When a dental practice is valued for a partner buyout or a divorce rather than a sale, goodwill becomes central, and Florida draws a firm line. Under Thompson v. Thompson, 576 So. 2d 267 (Fla. 1991), goodwill is a marital asset only to the extent it exists separate and apart from the reputation and continued presence of the individual professional. A dentist’s personal goodwill — value tied to his or her own patients, reputation, and clinical work — is not a divisible marital asset in Florida; only enterprise goodwill that would survive the owner’s departure is. The more a practice depends on one dentist, the more of its apparent value is personal rather than transferable. This is the same framework we apply to personal versus enterprise goodwill in a Florida divorce and to other professional-services firms, including an accounting practice.
When a dental practice valuation is needed
A credentialed valuation typically supports a sale to a DSO or an individual dentist; an associate buy-in or buyout; a partner buyout or dispute (see partnership buyouts and disputes); a divorce, where Florida’s equitable distribution reaches the marital portion of the practice; and retirement, death, or disability, which usually trigger a buy-sell agreement (see business valuations for buy-sell agreements).
Frequently asked questions
How much is a dental practice worth?
There is no single figure. A general practice sold to another dentist often prices near 65 to 75 percent of annual collections, or about 3.5 to 4.5 times EBITDA. A practice sold to a DSO is valued on normalized EBITDA at a multiple that scales with size — roughly 5 to 8 times at a single location and 8 to 12 times for larger multi-location platforms.
Is “percentage of collections” still a valid method?
It remains common in dentist-to-dentist sales, but it measures revenue rather than profit. Institutional buyers value practices on EBITDA, so a profitability-based analysis is essential whenever a DSO sale is realistic.
Why would a DSO pay more than another dentist?
Because of multiple arbitrage: when a practice is absorbed into a larger group, its earnings are revalued at the group’s higher platform multiple. The value rises from aggregation itself, before any operational change.
Do specialty practices sell for more?
Generally yes. Orthodontics, oral surgery, and endodontics typically command higher multiples than general dentistry because of stickier, referral-driven revenue, though factors such as Medicaid exposure can cap a given practice.
Is a dental practice a marital asset in a Florida divorce?
In part. Under Thompson v. Thompson, the practice’s enterprise goodwill and net assets can be marital property, but the owner-dentist’s personal goodwill is not a divisible marital asset. Separating the two is the heart of the analysis.
Working with a credentialed valuation analyst
Joey Friedman, CPA, P.A. prepares business valuations of dental practices and other professional practices for sales, associate and partner buyouts, divorce, and buy-sell matters throughout Florida and nationally. As an Accredited in Business Valuation (ABV) analyst and forensic accountant, Mr. Friedman normalizes the practice’s earnings, determines a supportable conclusion of value under the appropriate standard, and separates personal from enterprise goodwill so the analysis withstands scrutiny in a transaction, mediation, or litigation. To discuss a matter, contact the firm.
This article is general information, not legal or accounting advice for a specific matter. Market multiples are illustrative ranges drawn from published data and vary by practice; engage a qualified professional to value your situation.