Transition Information
Understanding the Value of Your Dental Practice

A dental practice valuation gives you a clear picture of what your practice is worth today. It reflects financial performance, patient activity, and market conditions so you can make informed decisions about selling, planning, or adjusting your long term strategy.

What Goes Into a Dental Practice Valuation

A valuation looks at the full financial and operational picture of a practice. Factors often include:
  • Collections and revenue trends 
  • Cash flow and profitability
  • Overhead and operating expenses
  • Active patient numbers and hygiene retention
  • New patient flow and referral sources
  • Fee schedules and payer mix
  • Staff structure and compensation
  • Equipment age and technology level
  • Facility characteristics and lease terms
  • Local market conditions and competition
  • Historical performance patterns

Our Approaches
How ADS Approaches Valuations

ADS Dental Transitions is made up of independently owned dental brokerage firms with extensive experience in dental transitions. Members meet strict qualification standards and follow a Code of Ethics centered on accuracy, confidentiality, and professionalism.
When a dentist requests a valuation, they work directly with the ADS broker in their area. That broker uses the valuation approach or combination of approaches they believe is appropriate based on their experience, the practice’s financial and operational details, and the conditions of the local market. They explain the valuation in practical terms so dentists understand how the value was determined and how it relates to their goals.

Common Valuation Approaches

Asset Based
Approach

This approach reviews the tangible and intangible assets of the practice, including equipment, supplies, and goodwill.

Market Based
Approach

This approach compares the practice with similar practices that have recently sold, considering size, specialty, performance, and location.

Income Based
Approach

This approach focuses on the earnings and cash flow the practice generates and how those earnings support an owner after expenses.

WHy choose us
When Dentists Typically Request a Valuation

Dentists request valuations for many reasons. Common situations include:
Get a Valuation
  • Preparing to sell now or in the near future
  • Planning for retirement
  • Considering a partnership change or buy in
  • Evaluating an associate purchase
  • Reviewing long term planning
  • Seeing how your practice’s value has shifted over the years

FAQ
Your Questions Answered

Common questions about Dental Practice Valuations.

The value of a dental practice is influenced by multiple factors, including its financial performance, patient base size and retention rates, location and market demographics, quality and condition of equipment and facilities, payer mix, staff experience and stability, and the practice’s growth potential. Intangible assets such as brand reputation and goodwill also play a significant role in determining value.

A dental practice valuation involves a comprehensive review of the practice’s financial records, patient charts, and operational data, as well as non-financial factors such as location, patient demographics, reputation, and equipment. Dental brokers typically use methods like income-based, market-based, and asset-based approaches to determine the practice’s accurate value.

Obtaining a professional valuation before selling ensures you have an accurate understanding of your practice’s worth, helping you set a realistic asking price. It also provides credibility to buyers, facilitates smoother negotiations, and helps identify strengths and weaknesses in the practice that may affect sale terms. A professional valuation can uncover opportunities to improve value prior to sale and protect you from undervaluing or overvaluing your practice, ultimately maximizing your financial outcome.

It is advisable to have your dental practice professionally valued regularly, or whenever you are considering a significant transition such as expansion, partnership changes, or a sale. Regular valuations help you track your practice’s growth, make informed business decisions, and prepare for future opportunities. Additionally, major market shifts or changes in your practice operations may warrant more frequent assessments.

Fair market value refers to the estimated price a willing buyer would pay to a willing seller in an open market, considering all tangible and intangible assets of the practice. Goodwill, on the other hand, is an intangible asset representing the practice’s reputation, patient loyalty, brand recognition, and other factors that contribute to profitability beyond the value of physical assets. While fair market value encompasses goodwill, goodwill itself specifically accounts for the premium above the tangible asset value that the practice commands.