What Is My Dental Practice Worth? Private vs. DSO Valuations Explained
Of the hundreds of consultations we perform with our clients each year, most include some version of the same question: “What is my practice worth?” It’s a simple question with a complicated answer that necessitates us asking you some questions before providing a response. Just as you evaluate a variety of factors before diagnosing treatment, we need to weigh numerous factors to determine what type of valuation fits your situation and what factors specific to you and your practice will drive the valuation result. Your practice is worth one number to a dentist buying it to operate themselves, and a very different number to a DSO or private equity firm. These two distinct markets have a unique set of buyers, deal structures, timelines, and math supporting their respective valuations. Let’s dive in.
Start With the Deal, Not the Number
Before we dive into the numbers, it’s important to understand that a doctor-to-doctor sale and a DSO sale are not simply the same deal with different price tags.
In a private buyer sale (doctor-to-doctor), the structure is straightforward. You sell your practice to another dentist, you receive 100% of the purchase price in cash at closing, and (unless you prefer to stick around longer) you are usually able to walk away shortly following closing. The buyer’s bank funds the deal, you get a check on the day of closing, and your involvement ends thereafter. This deal structure is an ideal fit for a doctor approaching retirement, relocating, or planning to exit the practice in the near future.
A DSO sale is more complex by design. First, most DSO deals require the selling doctor to continue working in the practice for a three-to-five-year “workback” period. Second, a typical DSO deal structure provides the seller with 50-80% of the valuation in cash at closing, with the remainder delivered through some combination of retained equity in your own practice (joint venture or “JV” equity), equity in the DSO’s parent company (holding company or “HoldCo” equity), and/or earnouts tied to the selling doctor fulfilling their post-closing commitment or the practice hitting certain post-closing performance targets.
This is why the sales price from a private buyer and the enterprise value from a DSO cannot be directly compared. One is mostly certain cash, paid now. The other is majority cash plus equity and/or earnout paid over time. Keep that framing in mind for the remainder of this discussion.
Key Factors that Impact Valuation
Within each market, a variety of practice characteristics need to be evaluated in determining where your valuation will land.
DSOs typically place a premium on multi-doctor practices, as this removes some of the key-person risk and illustrates a proven ability to scale. DSOs may scrutinize the active patient count more closely to identify situations where revenue-per-patient is potentially unsustainable. DSOs typically require a minimum of five operatories, with six or more strongly preferred, to provide a sufficient footprint to accommodate at least two doctors. DSOs tend to shy away from Medicaid-heavy practices, unless the Medicaid component is primarily related to pediatric dentistry. They are comfortable with a more specialized procedure mix so long as production is spread across several providers rather than concentrated in a single super-producer.
Private buyers are more forgiving on some fronts and more cautious on others. An individual dentist is perfectly comfortable acquiring a one-doctor practice, since they typically intend to work chairside and run the office themselves. They will consider a range of payor mixes (including Medicaid), though practices weighted toward Medicaid will generally command a lower valuation. Private buyers tend to be more hesitant about purchasing a practice with a broad or heavily specialized procedure mix, because they may not have the training or experience to replicate the selling doctor’s production and maintain practice revenue following the sale. A minimum of four operatories is typically necessary to generate sufficient buyer demand, with buyers preferring modern technology (digital radiography and paperless charts). Other factors including hygiene production, active patient count, new patient flow, reputation, and profitability are very important as well.
Geography Is Key
Geography can have a major impact on value and is worth discussing in isolation. While a practice can be sold in any geography, the location and market in which your practice is located have a substantial impact on valuation. Practices located in urban and suburban areas see the highest demand across the board from both private buyers and DSO buyers, with top metro areas commanding top-of-market valuations. DSOs are particularly focused on building density and recruiting associate doctors and staff, so they may shy away from a rural location with few practices in the surrounding area and no population center to draw from unless the practice features multiple providers and has demonstrated a consistent, proven ability to hire and retain associates and/or staff.
Many DSOs concentrate their presence in regions with favorable demographics and a growing population. The same is true for private buyers. A rural practice can absolutely be sold to another dentist (roughly 25% of McLerran & Associates’ practice sales are in rural areas), but the valuation will typically be lower than a comparable office located in an urban or suburban market, and it can take significantly longer to find the right buyer.
Doctor-to-Doctor Valuations
Private buyer valuations are built primarily on two measures: a multiple of the owner’s net cash flow and a percentage of annual revenue. Owner’s net cash flow is a measure of the owner’s true take-home pay after adding back all personal, non-recurring, and non-cash expenses (such as depreciation and amortization). The multiple applied to owner’s net cash flow and the percentage applied to annual revenue are determined based on the factors influencing value that we previously outlined. Nationwide, general dentistry practices typically trade for 1.5-2.5X owner’s net cash flow and 70-90% of trailing twelve-month (TTM) revenue in the private buyer world. Some in-demand specialties (such as orthodontics and pediatric dentistry) will land at the top of that range, while others (such as oral and maxillofacial surgery) may land toward the bottom of that range.
DSO Valuations
DSO valuations are determined based on a multiple of EBITDA over the TTM period. EBITDA is a measure of your practice’s true profitability after adding back all personal, non-recurring, and non-cash expenses, and after adjusting for all doctor compensation (including paying the owner a fair market wage to work chairside). What sounds simple can be quite complex – we have seen CPAs and advisors consistently miscalculate EBITDA by hundreds of thousands of dollars. Once the TTM EBITDA has been correctly calculated, a multiple is applied to EBITDA to determine the valuation.
The multiple itself varies based on the EBITDA level, geography, number of providers (key-person risk), the seller’s age and runway to exiting the practice, facility size, payor and procedure mix, and a number of other factors. Understanding the multiple that your specific practice will trade for requires in-depth market experience. As of mid-2026, a single-location general dentistry practice will typically be valued in the range of 5.5-7.5X EBITDA. A multi-location general dentistry practice generally falls in the range of 7-8X EBITDA. A true platform, meaning five or more locations and $3 million or more in EBITDA, will typically command 8-11X EBITDA. Specialty practices generally command top-of-market EBITDA multiples, particularly oral surgery, orthodontic, and pediatric dental practices. This is driven by heavy competition from both specialty-focused DSO platforms and general dentistry platforms aiming to fully build out referral networks in geographies where they have built significant density.
One critical caveat: The EBITDA multiples we have quoted above assume you have engaged a sell-side advisor (like McLerran) to run a competitive, blind-bid process among numerous DSO buyers. This process allows you to create the optionality necessary to find THE RIGHT DSO partner for your practice and the leverage necessary to negotiate an above-market outcome. You should not expect to obtain these EBITDA multiples if you fail to obtain proper representation or respond to an unsolicited offer. We regularly see doctors receive unsolicited offers that are 20-40% below market compared to what can be achieved when an experienced sell-side advisor runs a formal process.
Private (Doctor-to-Doctor) vs. DSO
| Private (Doctor-to-Doctor) | DSO | |
|---|---|---|
| Typical Buyer | Individual dentist | DSO or private-equity-backed group |
| Cash at Close | ~100% | Typically 50%-80% |
| Remainder | None; all cash at close | Retained equity and/or earnouts |
| Seller Workback | 3 weeks – 3 months | 3-5 years |
| Valuation Method | Multiple of owner’s net cash flow; % of annual revenue | Multiple of EBITDA |
| Average Valuation (McLerran Clients – 2025) | 2.2X Net Cash Flow | 6.75X EBITDA |
| Medicaid Tolerance | Acceptable | Valuation impacts unless Pediatric Medicaid |
So Which Path Is Right for You?
While it’s important to ensure you are achieving maximum value for your practice, the conversation should always start with defining your “WHY,” including your goals and timeline with respect to a transition. A private buyer sale can be a better fit when dealing with a smaller practice and/or a situation where the selling doctor desires to receive 100% cash at close and exit the practice in short order. Conversely, there are many situations where a DSO affiliation is more suitable due to the size of the practice, the seller’s goals, and the transition timeline. At McLerran & Associates, we start every process by understanding your WHY, completing a valuation from both a private buyer and DSO perspective, and evaluating the pros and cons of each viable transition strategy. Once you are fully educated regarding your transition options, we help you craft and execute a transition strategy that will meet your individual needs and maximize your economic outcome.
Our Track Record
McLerran & Associates has developed a reputation as the premier sell-side advisory firm for both doctor-to-doctor practice sales and DSO affiliations, facilitating the sale of nearly 100 practices per year. We employ two CPAs and several financial analysts, performing over 400 practice valuations annually. While we perform the valuation, our team is constantly thinking about each detail and how best to position the practice for maximum value when we go to market. As a result, we are regularly able to achieve sale prices that come in at or above our valuation mark. These results are driven by details, experience, and expertise, and we take pride in uncovering every opportunity to maximize our clients’ value when it comes time to sell.
Your practice is likely the most valuable asset you will ever sell, and you only get to sell it once. We believe in educating our clients on the market and their options, which always starts with a detailed valuation driven by your specific practice and your specific circumstances. If you are considering selling your practice within the next few years or are simply curious about what your practice is worth, we encourage you to schedule a confidential discovery call with our team. We look forward to working with you!
