How Much Is My Dental Practice Worth?

Every practice owner asks the same question eventually. What is my practice worth?

The honest answer starts with a different question. Which number do you actually mean? The same practice can be described very differently depending on how the buyer counts. Both descriptions can be technically accurate. They just answer completely different questions about your actual outcome.

Here is how to think about all of it.

The Three Lenses of Sale Price

When a buyer, broker, or another owner talks about what a practice sold for, they are almost always using one of three different numbers. Getting these straight is the difference between understanding your real outcome and being surprised by it later.

Lens 1: Cash at close

This is the actual money that hits your account on closing day. Cash-at-close is the multiple most directly tied to what you can spend, invest, or use to fund your next chapter.

Cash-at-close ranges are tighter than what you see in industry coverage or broker marketing. Two structural reasons why:

Bank covenants cap what any debt-financed buyer can pay. Most DSO acquirers are financed by senior lenders with strict leverage covenants. Those covenants limit what a buyer can pay in cash for any single practice, and the ceiling is lower than most sellers realize. Numbers you see quoted above the typical ceiling are almost always total deal value figures (Lens 2 or Lens 3 below), not cash at close.

Size drives everything. Smaller practices land in tighter bands at the low end because they trade to fewer buyers and carry more integration risk per dollar of EBITDA. Larger practices earn higher multiples because they attract competitive bidder interest, they are material enough to matter to a buyer's platform, and their operational infrastructure reduces integration risk.

So take any headline number with a grain of salt until you can check it against your specific practice size, provider structure, payer mix, and how the practice actually runs. General market coverage does not tell you where your practice lands.

Lens 2: Total contingent value

Cash at close plus rollover equity plus earnout at target. This is the number that appears in press releases and marketing materials because it is the biggest defensible number in the deal.

Rollover equity is typically structured as shares in the buyer's parent company. Its purpose is to keep the selling doctor invested in the group's success after close. When both parties execute well, rollover can add real value to the total outcome of the transaction. When the group grows, so does the rollover. The value depends on what happens to the buyer's business over the next 3 to 7 years, which is why the buyer's platform quality, growth trajectory, and doctor culture matter as much as the headline multiple.

Earnout is a portion of deal value contingent on the practice hitting specific EBITDA or revenue targets in the 1 to 3 years post-close. Earnouts exist to align the buyer and seller around the same outcome: growing the practice successfully after close.

Structured well, an earnout works for both sides. The buyer gets confidence that the seller stays invested in the transition. The seller gets real upside on the growth they help create. The right earnout target is one that is genuinely attainable with good execution, and both parties understand it may take real work to hit.

Where earnouts can go wrong is when sellers push for the highest possible headline cash number and, to make the total math work, buyers agree to earnout targets that are unrealistic. Everyone ends up unhappy. A well-negotiated earnout has a target both parties believe in and a clear path to hitting it.

Lens 3: Total realized value at exit

What you actually end up with after the earnout resolves and the rollover eventually becomes liquid. This is the biggest possible number and the most speculative.

If the buyer executes well and exits at a strong multiple 5 years post-close, your rollover shares can grow significantly. If the buyer runs into operational problems, faces a recession, or has to exit at a weaker valuation, the rollover can be worth less than the value assigned at your closing.

Lens 3 is real. It just is not knowable at closing. Any number quoted at Lens 3 is a projection based on assumptions.

Why This Matters for You as a Seller

Sellers usually anchor on the highest number they hear. If someone quotes them a large multiple, they hear that number times EBITDA in the bank.

The reality of that same quote is usually a smaller cash-at-close number, plus rollover equity that may or may not appreciate as promised, plus an earnout that historically pays out at a fraction of the target. When you weight that against how earnouts and rollovers usually pay out, the number you actually walk away with is closer to something in the middle.

Buyers are not being dishonest when they quote the bigger number. Both numbers describe the same deal, just from different angles. The problem is when the seller assumes one number is a promise and finds out later it was a projection.

A good conversation with any buyer covers all three lenses openly. Together you can look at what cash-at-close will be, what rollover mechanics look like, what any earnout would trigger on, and what the total realized outcome could be under reasonable assumptions. When both parties see the same math, the negotiation becomes about finding the right structure rather than debating whose number is correct.

Value Starts with Adjusted EBITDA

Before any lens or multiple applies, buyers start with your Adjusted EBITDA. Not collections. Not top-line revenue. Profit, adjusted for owner-specific items.

Example: Your practice collects $1.5M annually. After all operating costs (staff, rent, supplies, lab, insurance, marketing) and paying yourself a market-rate salary of $180K, you have $300K in EBITDA. Adding back $30K in personal expenses run through the practice and $25K of above-market owner comp gets you to $355K Adjusted EBITDA.

That $355K number is what any buyer starts from. Everything else, including which lens they use to describe the deal, applies on top of that starting point.

What Actually Determines Where You Land on Cash at Close

Cash at close is where most owners want the highest possible number, because it is the money they can actually use. Five factors move this number more than anything else.

Factor 1: Provider concentration

If you personally produce more than 70% of the practice's collections, buyers see risk. You either need to commit to staying for years post-close (extending your working timeline) or the buyer discounts what they will pay to account for the risk of a production drop after you leave.

Practices where the owner produces less than 50% of collections get better cash-at-close offers than practices where the owner still produces the majority of collections.

Factor 2: Payer mix

Insurance mix drives per-chair profitability, which drives EBITDA quality, which drives multiple.

Fee-for-service and commercial PPO heavy practices sit at the top of any range because reimbursement is predictable and margins per chair are higher.

Heavy Medicaid or HMO concentration compresses the multiple. This is not a value judgment on the practice. It reflects reimbursement rate risk, state policy exposure, and the buyer's ability to model future cash flow with confidence.

Factor 3: Procedure mix

A general practice doing $2M with 40% hygiene, 30% restorative, 20% cosmetic, and 10% specialty referrals looks completely different from a general practice doing $2M with 70% restorative, 20% hygiene, and 10% emergency work.

The first practice has recurring, predictable revenue anchored by hygiene. The second is dependent on production-intensive procedures that can vary widely month to month.

Procedure mix does not always show up as a headline factor, but it moves the multiple noticeably. A predictable revenue profile earns more than a volatile one at the same top-line collection level.

Factor 4: Hygiene percentage

Related to procedure mix but worth calling out on its own. Practices where hygiene generates more than 30% of collections earn a premium because hygiene is the most predictable revenue stream in dentistry. It is recurring. It anchors the schedule. It drives new patient acquisition through recall.

Practices where hygiene is under 20% of collections get discounted. It signals either weak recall systems or over-dependence on production-driven procedures.

Factor 5: Referral concentration

Especially relevant for specialty practices, but general practices are exposed too.

If more than 40% of your new patients come from a single referring source, the buyer treats that source as a single point of failure. A retiring referring dentist, a specialist opening a competing office, or a large employer changing insurance plans can all wipe out a big chunk of new patient flow.

Diversified referral sources add stability. Concentrated referral sources subtract from the multiple.

How Specialties Are Valued Differently

The five factors above apply to every dental practice. Specialties layer additional considerations on top.

Orthodontics

Orthodontic practices earn a premium over general dentistry at comparable size tiers. The reason: a meaningful percentage of ortho revenue is contracted rather than transactional. A patient in month 8 of a 24-month treatment plan represents future payments regardless of what happens elsewhere in the practice.

That predictability is worth something. Ortho practices get better cash-at-close multiples than GPs of the same size.

Things that specifically affect ortho valuation: aligner vs traditional case mix, contract book value at close, referral base for pediatric patients, direct-to-consumer marketing performance.

Pediatric

Pediatric practices earn a premium for similar reasons: recurring revenue tied to recall cycles and long patient lifetime value.

The premium is real but capped by payer mix. Pediatric practices in heavy-Medicaid states get compressed multiples even if operationally strong. Fee-for-service or commercial-heavy pediatric practices sit toward the top of the specialty band.

Things that specifically affect pediatric valuation: sedation capabilities, kid-friendly facility investment, GP referral network strength, state Medicaid reimbursement rates and stability.

Oral Surgery

Oral surgery earns the highest specialty premium in dentistry. Per-procedure margins are the highest in the field, and OMS practices typically face limited direct competition.

The premium comes with unique risks. OMS practices are almost entirely referral-dependent, which makes referral concentration risk higher than in any other specialty. And the capital investment required (surgical suites, anesthesia equipment, CBCT) means the deferred maintenance discount can be steeper for OMS practices with dated infrastructure.

Things that specifically affect OMS valuation: referring dentist diversification, in-house anesthesia capabilities, facility investment recency, medical insurance credentialing.

Things to Verify Before Believing a Number

Before signing any Letter of Intent, translate the offer through all three lenses. Every buyer should be able to do this exercise with you transparently. If they cannot or will not, that is information.

Questions to ask any buyer:

• What is the cash-at-close number, specifically?
• What is the rollover equity structure? How is it valued? When does it become liquid?
• What is the earnout structure? What specifically triggers payment? What percentage of your recent earnouts have paid at 100% of target?
• What are the working capital adjustments at close?
• What is the escrow amount and holdback period?

The best deals get done when both sides see the whole picture. A buyer who walks through the numbers openly at LOI is usually a buyer who is easier to work with all the way through close and beyond. If they get vague when you ask specifics, that tells you what the rest of the deal will feel like.

Where Bluetree Sits (Honestly)

I lead business development for Bluetree. Standard disclosure: I am not neutral here.

We are a doctor-owned group actively looking for partnerships with orthodontic, pediatric, and oral surgery practices, alongside our continued general dentistry focus. Specialty partnerships are structured the same way our GP partnerships work: full acquisition with the doctor remaining as clinical leader, back-office handled by us, rollover equity in the doctor-owned parent company.

How our deals typically look:

• Cash at close covers the majority of the deal value, usually 60% to 80% of the total.
• The rest sits in rollover equity in our parent company, or a combination of equity and short-term holdback.
• For practices with strong growth potential, we get creative with earnout structures to align on that growth so the seller shares in the upside they help create.

We walk every owner through the three-lens breakdown of any offer we make. We explain what our cash-at-close number is, what the rollover mechanics look like, what any earnout would trigger on, and what total realized value could look like under reasonable assumptions. Nothing is hidden. Nothing is inflated.

Whether specialty or general, we are honest about who fits us and who does not. If your practice does not fit our model, we will say so and often help you think through better alternatives.

If you want to walk through what your practice might look like across the three lenses, reach out. No obligation to work with us after.