Dental Practice Valuation Calculator
Estimate practice value using collections, overhead, SDE, and asset-based methods with industry-standard multipliers.
Medical Disclaimer
This calculator is for informational and educational purposes only. It is not a substitute for professional medical advice, diagnosis, or treatment. Always consult a qualified healthcare provider before making decisions about your health. Never disregard professional medical advice or delay seeking it because of results from this tool.
Inputs
Results
Estimated Practice Value
$1,153,200.00
≈ 3 average U.S. homes
How to Use This Calculator
- Enter Annual Collections and the practice Overhead Rate (%) from recent profit and loss statements.
- Input Owner Compensation %, Annual Growth Rate, and Tangible Assets value.
- Enter Active Patient Count and Years in Practice to refine the valuation.
- Review Collections-Based Value, SDE-Based Value, and Asset-Based Value.
- The Blended Valuation and Collections Multiple provide a market-range estimate for buy/sell negotiations.
How the result changes with Annual Collections ($)
| Annual Collections ($) | Estimated Practice Value |
|---|---|
| 1,000,000 | $966,000.00 |
| 3,500,000 | $3,306,000.00 |
| 6,500,000 | $6,114,000.00 |
| 9,000,000 | $8,454,000.00 |
What each input means
- Annual Collections ($)
- Total annual collections (not production). This is the primary driver of dental practice value.
- Overhead Rate
- Total overhead as percentage of collections. Industry average is 59-65%.
- Owner Compensation
- Owner's clinical compensation as a percentage of collections.
- Annual Growth Rate
- Year-over-year collections growth. Positive growth increases valuation multiples.
- Tangible Assets ($)
- Fair market value of equipment, furniture, and supplies.
- Active Patient Count
- Number of patients seen within the last 18-24 months.
- Years in Practice
- How long the practice has been operating at this location.
What each result means
- Estimated Practice Value
- Weighted average of collections, SDE, and asset-based valuation methods.
- Collections-Based Value
- Value based on percentage of annual collections (most common dental method).
- SDE-Based Value
- Value based on seller's discretionary earnings multiple.
- Asset-Based Value
- Tangible assets plus estimated goodwill (floor value).
- Collections Multiple
- Applied multiplier on collections (typical range: 0.60-0.85x).
- SDE Multiple
- Applied multiplier on SDE (typical range: 1.5-3.0x).
- Seller's Discret. Earnings
- Net income plus owner compensation (SDE = what the owner truly earns from the practice).
- Net Income
- Collections minus total overhead.
- Value per Active Patient
- Practice value divided by active patient count.
- Goodwill Value
- Estimated intangible goodwill value.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersAnnual Collections ($) = 1200000, Overhead Rate = 62, Owner Compensation = 30, Annual Growth Rate = 5 = 7 input(s) provided
- Calculate Estimated Practice ValueEstimated Practice Value = (collectionsValuation * 0.40) + (sdeValuation * 0.40) + (assetValuation * 0.20)1153200 = $1,153,200
- Calculate Collections-Based ValueCollections-Based Value = annualCollections * collectionsMultiplier876000 = $876,000
- Calculate SDE-Based ValueSDE-Based Value = discretionaryEarnings * sdeMultiplier1632000 = $1,632,000
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