It takes the prior year's net income (or the average of the last few years income) divided by a capitalization rate to determine the fair market value of a dental practice. The industry standard cap rate ranges anywhere between 15% to 30%, but closer to 25% to 31% on average.5 jun 2020
How many times EBITDA is a dental practice worth?
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) is currently used as part of the dental practice valuation process. The current range of prices that a single practice can expect to attract averages at between 6x and 7x EBITDA.
How profitable are dental practices?
The average profitability range for a general dentistry practice is around 30%–40% of revenues, but this number can be deceivingly hard to compute. Many of the practice expenses shown on the tax returns or P&L statements need to be adjusted to determine the true profitability of the practice.8 nov 2018
Are dental offices profitable?
On average, general practices are bringing in $771,000 in annual revenue and specialists are bringing in $1.1 million. So why aren't dentists making more money? The answer is simple: overhead. Both GPs and specialists are spending 75% of their annual revenues on overhead costs, leaving only a 25% profit margin.