Practice Transitions - Sunset on your own terms!
Practice Transitions - Sunset on your own terms!
Frye Practice Sales is a Dental Transition and Commercial Real Estate Brokerage. Karl Frye is the Principal Broker and has provided these blog posts for those thinking about taking this step. Enjoy and feel free contact us!
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What Actually Drives the Price of a Dental Practice

10/15/2026 2:27:00 PM   |   Comments: 0   |   Views: 54
I hear it all the time from doctors thinking about selling: "Practices go for about 70 percent of collections, right?" That rule of thumb is a starting point at best. Two practices with identical collections can sell for very different prices, and the gap usually comes down to a few things buyers look at closely.

Cash flow, not gross. Gross tells a buyer how busy you are. Cash flow tells them what they can actually take home and use to service a loan. Buyers and lenders work from normalized earnings, meaning your profit after adjusting for your own pay and any personal expenses running through the practice. If those adjustments are documented, they count. If they are not, they get discounted.

Trends over a few years. Three steady or growing years beat one great year followed by a dip. Buyers pay for a track record. "Potential" is something every seller claims and few buyers pay for.

Goodwill that transfers. Goodwill is not just your personal relationships with patients. It is whether patients stay after you leave. A working recall system, a healthy active patient count, good reviews and a practice identity that is bigger than one doctor all make the patient base more likely to stick with a new owner.

Team stability. An experienced team with low turnover lowers the risk for a buyer. Most buyers want to keep the staff, because the staff holds the patient relationships day to day.

Facility, equipment and lease. Buyers expect digital imaging and a modern practice management system. Updated equipment helps when it makes the practice more efficient or profitable, not just when it is new. And do not overlook the lease. A short term or unfavorable renewal terms can stall a sale or lower the price.

If you are a few years from selling, the useful question is not what multiple you will get. It is which of these areas you can strengthen before a buyer starts looking. Most of them take time to show up in the numbers, so starting early matters.

Full article: https://fryepracticesales.com/beyond-the-collections-the-critical-factors-that-drive-dental-practice-valuation/
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