My father plans to retire in 2027. How do you value a family practice?
Valuing a dental practice rests on three methods that should always be used together, never one in isolation. The first is the income method: take the average operating margin of the last three years, normalise it (strip extraordinary items, restate owner compensation at the market rate of an equivalent employee), and capitalise it at a rate between 25% and 35%, depending on the patient base's risk.
The second is the asset method: revalue clinical furniture, inventory, technology and premises (if owned) at market prices.
The third is a revenue multiple, which in dentistry today ranges from 0.7× to 1.2× depending on the share of new patients, recurring clientele, and dependence on the principal.
For a family practice transferring father-to-son, the crux isn't how much — it's how. Structuring the transfer over three or four years through equity tranches plus a consulting contract for the outgoing owner saves taxes and (more importantly) keeps the patient base together. To discuss it concretely against your numbers, this is exactly the kind of work we do in an in-person consultancy.