Whether you’re preparing to sell your dental practice in the next year or simply curious about its worth, knowing your practice’s value is one of the smartest business moves you can make. A professional dental practice valuation can guide retirement planning, inform partnership decisions, and help you seize opportunities when the timing is right.

At Legacy Practice Transitions, we specialize in evaluating and selling dental practices across Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Michigan, Missouri, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, and Wisconsin. We’ve helped hundreds of dentists determine the fair market value of their practices and successfully navigate the sale process.

In this guide, we’ll walk you through the step-by-step process of valuing a dental practice, the key factors that influence value, and why working with an experienced transition team matters.

Step 1: Understand What a Dental Practice Valuation Really Is

A dental practice valuation is more than just a financial snapshot – it’s a comprehensive assessment of the tangible and intangible assets of your practice. While many dentists assume it’s as simple as applying a formula to annual revenue, the reality is far more nuanced.

A true valuation considers:

• Tangible assets: dental equipment, technology, furniture, and office improvements.
• Intangible assets: goodwill, patient relationships, reputation, and brand recognition.
• Marketability factors: location, competition, growth potential, and community demographics.

In short, a proper valuation is part science, part art – requiring both accurate data and industry experience.

Step 2: Gather the Right Financial Data

Before any calculations can begin, you’ll need to compile detailed financial records for the past 3–5 years. This typically includes:

• Profit and loss statements
• Balance sheets
• Tax returns
• Production and collection reports
• Payroll records
• Accounts receivable aging reports

These numbers give your valuation expert a clear picture of your practice’s financial health and trends over time. Missing or incomplete data can make it harder to arrive at a reliable value – and could delay your sale.

Step 3: Evaluate Practice Performance Metrics

In addition to your financials, certain key performance indicators (KPIs) directly affect your practice’s value:

• Annual collections and production per provider
• New patient flow
• Case acceptance rate
• Hygiene department production
• Overhead percentage

For example, a practice in North Carolina generating $1.2M in annual collections with strong hygiene revenue and low overhead will often command a higher value than a similar-sized practice with higher expenses and fewer new patients.

Step 4: Consider Location and Market Trends

Where your practice is located can play a significant role in its valuation. Practices in growing communities or areas with favorable demographics often have higher market demand.

At Legacy Practice Transitions, we’ve seen this firsthand:

• Florida and Texas practices in high-growth metro areas often see competitive bidding.
• New York and Pennsylvania urban practices can command strong values if they have efficient operations and loyal patient bases.
• Kentucky and Indiana rural practices may appeal to buyers looking for less competition and lower overhead, though values can vary based on buyer pool size.

Understanding your local market – and how buyers perceive it – is essential to setting a realistic and profitable asking price.

Step 5: Choose the Right Valuation Method

There is no single “correct” method for valuing a dental practice, but some approaches are more common:

• Market Value Analysis (MVA): Compares your practice to recent sales of similar practices, adjusting for unique factors.
• Income Approach: Projects future earnings and discounts them to present value.
• Asset-Based Approach: Focuses on tangible and intangible assets separately.

At Legacy Practice Transitions, we use a modified Market Value Analysis approach refined through decades of experience. This method blends data-driven calculations with real-world knowledge of the dental marketplace to arrive at a fair and realistic number.

Step 6: Account for Goodwill and Intangibles

In many cases, goodwill – the value of your reputation, patient relationships, and brand recognition – can account for a significant portion of your practice’s worth. Factors like patient retention, recall systems, and staff longevity play into this figure.

For example, a South Carolina practice with a 90%+ patient retention rate, long-term hygienists, and a strong online reputation may achieve a higher valuation even if its tangible assets are similar to another practice.

Step 7: Avoid Common Valuation Mistakes

Some dentists inadvertently hurt their valuation by:

• Overestimating value based on emotion rather than data
• Neglecting to track KPIs or keep clean financial records
• Waiting until retirement to make operational improvements
• Not planning for emergencies, such as illness or injury, which can cause value to drop within 30 days

Our Legacy Protection Plan helps dentists avoid these pitfalls by providing an annual valuation update – keeping you informed and prepared for any scenario.

Step 8: Work with Experienced Transition Specialists

While you could attempt to value your own practice, the reality is that experience matters. A skilled transition specialist understands not just the math, but also the buyer mindset, financing requirements, and market nuances in each state.

Legacy Practice Transitions brings:

• Experience in 15 states, with local market insights in each
• Proven success in both urban and rural practice sales
• A tailored approach that aligns with your personal and financial goals

Final Thoughts: Know Your Value Before You Need To

Whether you’re planning to sell in six months or six years, knowing your dental practice’s value today puts you in a position of strength. It can help you:

• Plan for retirement with confidence
• Make informed decisions about investments and growth
• Protect your estate in case of unexpected events

At Legacy Practice Transitions, we’re here to help you understand your practice’s fair market value – and when the time comes, guide you through a successful sale.

Schedule your confidential consultation today to learn what your practice is worth and how to position it for maximum value in the marketplace.

States Serviced by Legacy Practice Transitions

• Florida
• Georgia
• Illinois
• Indiana
• Kentucky
• Maryland
• Michigan
• Missouri
• New York
• North Carolina
• Ohio
• Pennsylvania
• South Carolina
• Tennessee
• Texas
• Wisconsin