What is a dental practice worth?

Ask an owner what their practice is worth and most reach for a percentage of turnover. It is the wrong instinct, and it usually costs them.

Turnover is a vanity number

A practice billing $1.2 million sounds like a bigger sale than one billing $700,000. Often it isn't. Two practices can turn over the same and be worth very different sums, because what a buyer is really purchasing is the profit that survives the owner walking out the door. That figure — not turnover — is what a bank lends against and what the price is built on.

Goodwill is most of it

A practice sale is really two things bundled together: goodwill — the value of an established, trading business with patients who return — and the equipment and fit-out. In a healthy going concern, goodwill is the large majority of the price. The chairs and the cabinetry are added on top at their written-down worth, not what you paid for them. So the question "what is it worth?" is mostly a question about the goodwill, and goodwill is a question about profit.

Normalised EBITDA, in plain terms

The starting point is earnings before interest, tax, depreciation and amortisation: roughly, the cash the practice throws off before financing and accounting effects. Then it gets normalised — adjusted to show what the business would earn for an arm's-length owner rather than for you specifically.

The largest adjustment is your own dentistry. If you bill $500,000 a year in the chair and keep whatever is left, a buyer cannot assume they will do the same. So we replace your drawings with what it would cost to employ a dentist to do your clinical work — commonly around 40 per cent of the fees you generate. Then the one-offs and the personal items that found their way into the accounts come out: the car, the conference on the Gold Coast, the relative on the payroll who doesn't really work there. What remains is a number a stranger could actually earn.

A buyer isn't paying for what the practice earns for you. They're paying for what it will earn for them.

The multiple, and what moves it

That normalised figure is multiplied to reach the goodwill value. Most general practices change hands somewhere between three and five times normalised earnings. Where a particular practice sits in that range is the whole game, and it turns on risk far more than size:

• How much of the goodwill walks out with you. A practice built on the owner's personal following is worth less than one where patients book with "the practice".
• The recall and hygiene base — active patients who come back, not a fat file of names who last visited in 2019.
• Lease security. A long, assignable lease on fair terms is worth real money; a short one, or a difficult landlord, is a discount.
• Staff who stay. An experienced, settled team that intends to remain removes a large slice of a buyer's risk.
• Room to grow — an empty surgery, unused hours, a chair plumbed and waiting.

Why the rule of thumb fails

"Practices sell for 60 to 80 per cent of annual revenue" is the kind of line that travels well at a conference and badly in a sale. It ignores margin entirely. A high-billing practice with thin profit and heavy owner-dependence can be worth less than a smaller, leaner one down the road. Price off turnover and you either leave money on the table or frighten off every serious buyer — and serious buyers arrive with an accountant who has already priced it properly.

An appraisal is a defensible number, not a hopeful one. We build it from your last three years and show our working — for nothing, and in confidence. See how a sale runs, or read more insights.

Written by Elmvia · June 2026