How to Navigate the Market When Buying and Selling Dental Practices

The dental industry continues to evolve, and with it comes a complex landscape for those looking to buy or sell a dental practice. Successful transitions require more than just timing, they demand strategy, data-driven valuation, and trusted professional guidance. At Dental Strategic, we help independent dentists navigate every stage of this process, from valuation and preparation to negotiations and final transitions.

Our goal is to simplify the path forward, whether you’re entering ownership for the first time or preparing to sell your established practice. This guide will help you understand how to make informed decisions, avoid costly mistakes, and work with a team that puts your best interests first.

This Article will address:

• The most common valuation methods used when buying or selling a dental practice
• The key factors that influence practice value
• What buyers should evaluate before purchasing a dental practice
• How real estate and office leases impact transitions
• The risks and pitfalls to avoid during a sale or purchase
• Why working with a professional broker is essential
• How Dental Strategic supports clients nationwide through every phase of practice ownership

What Valuation Methods Are Used When Buying or Selling a Dental Practice?

Establishing an accurate valuation is the cornerstone of any successful dental practice transaction. Two of the most commonly used  methods are used to determine fair market value:

• Seller’s Discretionary Earnings (SDE): This method focuses on the total financial benefit available to a single owner-operator, accounting for salary, benefits, and add-backs.
• EBITDA-Based Multiples: Larger or multi-doctor practices often use EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to measure operational performance and calculate value based on market multiples.

At Dental Strategic, we analyze both financial and operational data to determine value using real-world performance, regional market comparisons, and growth potential. This approach mirrors industry best practices recognized by the American Dental Association (ADA) and firms such as Integrity Practice Sales, ensuring valuations are objective and defensible.

Common Valuation Factors Include:

• Historical cash flow and revenue trends
• Active patient base and retention rates
• Geographic location and local demographics
• Quality of facility, equipment, and technology
• Goodwill and community reputation
• Opportunities for future growth
• Payments breakdown
• Production within the office

What Are the Key Factors That Impact the Value of a Dental Practice?

A practice’s value extends beyond numbers on a spreadsheet. Several measurable and intangible elements influence the final outcome:

• Historical Revenue and Profit Margins: Consistent earnings demonstrate reliability and growth potential.
• Patient Base Stability: Practices with strong recall systems and loyal patients tend to hold higher value.
• Lease Terms and Facility Condition: Favorable lease agreements and updated office spaces improve buyer confidence.
• Insurance Participation and Payer Mix: The balance between private-pay and insurance patients affects profitability.
• Technology and Digital Integration: Modern, paperless systems and advanced equipment can increase desirability.
• Online Reputation and Branding: Strong community reputation and digital visibility attract higher offers.

Dental Strategic evaluates each of these elements to create a complete picture of a practice’s current and future value.

What Should a Buyer Look for When Buying a Dental Practice?

Purchasing a dental practice requires a thorough understanding of both financials and day-to-day operations. Buyers should review all aspects of the business to ensure they are investing wisely.

Key due diligence areas include:

• Financial statements and tax returns for the past three years
• Production by provider and fee schedules
• Team structure, employment agreements, and compensation models
• Hygiene recall rates and patient demographics
• Operational systems and technology integration

At Dental Strategic, we provide buyers with a detailed checklist that mirrors the thoroughness of industry leaders like Curve Dental but is tailored to private buyers who need practical, hands-on insight.

Key Considerations for First-Time Buyers

• Assess financing readiness and prequalification options.
• Review staff transition agreements to maintain continuity.
• Analyze fee schedules to ensure competitive pricing.
• Evaluate community demographics and local competition.

Our consultants guide buyers through every step, ensuring a smooth transition from associate to owner.

How Does Real Estate or Office Lease Affect the Sale or Purchase of a Dental Practice?

Real estate plays a major role in dental practice transactions. Whether you own or lease, property terms can influence valuation, financing, and long-term stability.

• Review lease agreements early to identify assignment clauses or landlord consent requirements.
• Confirm that lease terms align with financing timelines.
• Evaluate property condition, parking availability, and visibility, factors that affect both appraised value and patient accessibility.

For sellers who own the building, the decision to include or exclude the property in the sale impacts taxes and buyer interest. Dental Strategic works alongside attorneys, brokers, and lenders to coordinate these details and prevent closing delays.

What Are the Risks and Pitfalls to Avoid in Buying or Selling a Dental Practice?

Every transaction carries potential challenges. Recognizing and addressing them early helps prevent costly setbacks.

Common pitfalls include:

• Overvaluing or undervaluing the practice due to limited market data.
• Incomplete due diligence or missing documentation.
• Miscommunication with staff and patients during transition.
• Inadequate tax or legal planning before closing.
• Unrealistic post-sale expectations about income or patient retention.

Why Is It Important to Work with a Professional Dental Practice Broker?

Attempting to buy or sell a dental practice independently can lead to underpricing, exposure risks, and legal oversights. A professional dental practice broker provides:

• Market exposure to qualified buyers and sellers.
• Negotiation expertise and confidentiality throughout the process.
• Coordination of appraisals, financing, and legal requirements.

Dental Strategic’s Approach:

We go beyond standard brokerage. Our advisors combine industry experience, valuation knowledge, and recruiting expertise to deliver comprehensive support. This means you gain not only a transaction partner but a strategic advisor who understands both the business and the human aspects of dentistry.

Why Choose Dental Strategic to Help You Navigate the Dental Practice Market?

Dental Strategic serves dentists nationwide through a lifecycle approach that includes starting, growing, evaluating, and transitioning practices. Our team is known for:

• National reach and experience with diverse practice types.
• Personalized consulting tailored to individual goals.
• Transparent communication and detailed guidance.
• Proven results with successful transitions across the country.

Contact us to Plan Your Next Step with Dental Strategic

Navigating the dental practice market requires clarity, planning, and trusted expertise. From accurate valuations to risk management and buyer readiness, every decision influences long-term success.

Contact us to find your partner for every stage of the process, buying, selling, or transitioning your practice. Our team provides the structure, strategy, and support needed to help you move forward confidently.

Sources:

• American Dental Association. Buying or Selling a Dental Practice: Start with an Accurate Valuation. https://www.ada.org
• Integrity Practice Sales. The Definitive Guide to Dental Practice Sales. https://www.integritypracticesales.com
• Curve Dental. Evaluating and Purchasing a Dental Practice. https://www.curvedental.com