You spend decades building something patients trust. A team and a schedule you're proud of. Then, when the time comes to think about what it's all worth, the number a buyer puts on the table can feel like it came from a different reality.
That gap between what you expect and what a buyer will pay is never random. It comes down to a handful of specific, measurable factors that have been building or eroding inside your practice for years.
Most dentists have heard some version of this: "Your practice is worth about 70% of what you collect." This exists because valuation is genuinely complex, and it gives something to anchor to when the real math feels out of reach. The problem is that two practices can collect the exact same amount and still be worth completely different prices. Sometimes hundreds of thousands apart.
So where does that gap come from?
How dental practices actually get valued
Revenue multiples: quick, but incomplete
The first method is the revenue multiple. Take your gross annual collections, multiply by somewhere between 0.6 and 0.8, and you have a rough estimate. The math takes thirty seconds. The problem is what it ignores entirely.
Two practices can both collect $800,000 a year. One carries $600,000 in expenses. The other carries $400,000. A revenue multiple treats them identically. Any serious buyer will not.
"Your top line revenue isn't what matters. It's your bottom line, the net cash flows coming out of the practice after paying all of your expenses. That's the amount of money you're going to be using to pay back the loan and fund your lifestyle."
Jennifer Blair, Transition Consultant, Henry Schein Tier Three Brokerage
Earnings multiples: what serious buyers actually use
The second method is what serious brokers and appraisers actually rely on. It starts with net earnings, what remains after all practice expenses are paid, before the owner takes their income out. That figure gets multiplied by a factor that reflects the quality and stability of the business.
In Canada, practices typically sell for between five and 6.5 times earnings, with some reaching seven times projected earnings.
In the US, smaller practices generally fall between 1.75 and 2.25 times seller's discretionary earnings, though the range is wide. Where your practice lands depends on whether your patient base is growing or shrinking, how stable your lease is, whether production is tied to one clinician whose skills don't transfer, and whether your financials are clean.
Goodwill: where most of the real value lives
The third piece is goodwill, and it's often the biggest part of the price. Chairs, X-ray equipment, and leasehold improvements have a straightforward dollar value. Goodwill is everything else: the 1,800 patients who already trust the practice, the reputation built over fifteen years in the community, the families who come back every six months without being asked twice. Analysis from Henry Schein Tier Three Brokerage consistently finds that patient goodwill is worth roughly three times the value of physical assets.
To see why that matters, compare two practices with identical equipment, identical locations, and identical revenue. One has strong hygiene recall and a 4% attrition rate. The other has a 15% attrition rate and patients who mostly come in once and disappear. The first is worth significantly more, and any buyer doing proper due diligence will see it immediately.
Goodwill is also the most fragile part of a practice during a sale. A well-managed transition typically results in less than 10% patient attrition. A rushed or poorly communicated handover can undo years of built-up trust very quickly.
What actually moves the number
Many dentists assume that spending money on the practice increases its value. New chairs, fresh paint, updated imaging.
"There's a big difference between things that add value to your practice and things that add saleability and marketability."
Barb Johns, Transition Consultant and Practice Broker, Henry Schein Tier Three Brokerage
A renovated waiting room may help your practice sell faster. It doesn't make it worth more. Value is driven by earnings, and earnings come from patients.
Patient retention matters more than new patient volume
The most important driver of value is patient retention. According to Dental Economics, the average practice loses around 25% of its patients every year. Pouring money into new patient marketing while retention is weak doesn't help.
"Investing more into marketing to drive patients only makes sense if you're actually retaining the patients that you're gaining."
Barb Johns, Transition Consultant and Practice Broker, Henry Schein Tier Three Brokerage
Your attrition is the first thing to fix.
Your hygiene program is a financial asset
The second underrated driver is your hygiene program.
"Every incremental dollar of hygiene you add to your practice is going to add significantly more to the value of the practice than every dollar of dentistry. A dollar in hygiene yields about 70 cents in contribution. A dollar in dentistry yields about 40 to 45 cents."
Bill Henderson, Former President, Tier Three Brokerage
A strong hygiene program isn't just better preventive care. It creates predictable income month to month, which is exactly what buyers pay a premium for.
Systems show up in due diligence
The third driver is operational consistency. Practices that sell for the highest multiples don't just have strong clinical care. They have systems. The front desk knows how to handle a new patient call, follow up on a cancellation, and keep the schedule full. Patients don't fall through the cracks. The numbers are clean. Buyers see this quickly during due diligence, and they price it in.
When to start
If you're within five years of a potential sale, consider getting a professional appraisal now, not as a final verdict but as a diagnostic. Identify the two or three metrics pulling your value down and build a plan around those specifically. Three to five years is enough time to grow your patient base, tighten recall, and create a financial history that tells a buyer a clear, improving story. Six months is enough time to paint the walls.
For a deeper look at how appraisers calculate practice value, including what to measure and how to read your own numbers, check out this detailed guide on how to value a dental practice.