Understand the value
behind your practice.
What is a dental practice worth—and what supports that number? Explore the process, prepare the right information, and learn how a professional valuation can guide your next decision.
What is a dental
practice valuation?
It is an informed opinion of a practice’s value at a specific date, for a defined purpose. The analyst examines financial performance, assets, market evidence, and the risks that affect future earnings.
It can support a sale, purchase, partner buy-in, or succession plan. Defining exactly what is being valued—and who will rely on it—comes first.
Background: ADA · IRS valuation guidelines
Value: an analytical conclusion
A supported opinion based on the assignment’s facts, assumptions, and standard of value.
Asking price: a starting point
The amount a seller requests. It may differ from the analyst’s conclusion or the price ultimately negotiated.
Financing: a separate decision
A lender also evaluates repayment ability, the buyer, and the proposed transaction. A valuation does not guarantee a loan.
From first conversation
to final conclusion.
This planned video will walk through the major stages of a dental practice valuation: setting the scope, reviewing records, analyzing the practice, selecting methods, and explaining the report.
The work behind the number
Define the assignment
Agree on the purpose, valuation date, ownership interest, assets included, and intended users.
Understand the practice
Review financial records, operations, market conditions, and the transition being considered.
Normalize earnings
Evaluate unusual expenses, owner compensation, related-party rent, and other supported adjustments.
Apply the methods
Select suitable approaches and weigh the evidence. Different practices can call for different emphasis.
Explain the result
Document the conclusion, supporting analysis, significant assumptions, and limitations.
Income approach
Connects expected earnings or cash flow to value, considering the risk of receiving that income.
Market approach
Uses evidence from comparable transactions, with attention to differences in size, profitability, and deal terms.
Asset approach
Examines the value of assets and liabilities. Equipment alone may miss the value of an ongoing practice’s goodwill.
An analyst selects and reconciles appropriate methods; the result is not a mechanical average. NACVA standards · IRS valuation guidelines · Goodwill background
The business principles are familiar.
The clinical details matter.
Like other businesses, dental practices are evaluated for earnings, assets, and risk. But the ability to sustain those earnings depends on details a generic business review can miss.
Patients & continuing care
Active-patient definitions, new-patient flow, retention, and hygiene recall help explain how dependable future visits may be.
Provider & procedure mix
Doctor versus hygiene production, specialty procedures, and referral relationships show which revenue may depend on the departing dentist.
Payer mix & collections
Fee-for-service, PPO, and other payer relationships affect reimbursement. Production, write-offs, collections, and aging receivables tell different stories.
People & operating costs
Team continuity, compensation, associate arrangements, and the cost of replacing the owner’s clinical work affect sustainable earnings.
Space & clinical equipment
Operatories, equipment condition, needed upgrades, and lease terms influence capacity and future investment. Real estate is valued separately.
Goodwill & transferability
Reputation and patient loyalty create value when they can carry forward. A transition plan helps assess what may remain after the seller leaves.
Dental considerations: ADA valuation overview · ADA transition guidance · Lender perspective · Goodwill background
Better information.
A stronger foundation.
The planned second video will explain what to gather, why each item matters, and how to address missing records or inconsistent reports.
Financial records
- Business tax returns, typically 3–5 years
- Profit-and-loss statements and balance sheets for the same periods, plus year-to-date
- Owner compensation and proposed expense adjustments, with supporting records
- Debt, equipment leases, and related-party payments
Practice performance
- Monthly production and collections; accounts-receivable aging
- Production by provider and procedure category
- Fee schedules, payer mix, and relevant payer agreements
- Active-patient counts, new patients, and recall information
People, space & equipment
- Employee roles, compensation, benefits, and tenure
- Associate agreements and provider schedules
- Office lease, amendments, and renewal options
- Equipment inventory, condition, and anticipated replacements
Ownership & transition details
- Ownership structure and relevant buy-sell agreements
- Assets included or excluded from a proposed sale
- Material changes in staffing, services, or operating hours
- Seller transition plans and lender instructions, if applicable
Before sharing: Ask Forrestall for its secure document-transfer process. Start with aggregate practice reports and avoid sending identifiable patient information through ordinary email or a general contact form.
Preparation guidance: ADA · NACVA. This is a starting checklist, not a complete engagement-specific request list.
See how the pieces
come together.
The planned final video will break down an example practice valuation, connecting the source records, financial adjustments, practice characteristics, and selected methods to the result.
1. Follow the adjustments
Which expenses are truly nonrecurring? What costs must continue under a new owner? Every adjustment needs an explanation.
2. Examine the assumptions
What supports the earnings outlook? How might patient retention, staffing, or equipment needs change it?
3. Read the boundaries
What is included in the conclusion? Check the valuation date, ownership interest, assumptions, and limitations before comparing numbers.
No example valuation has been published yet. Any future example will be illustrative and will not establish the value of your practice.
Why a Certified Valuation
Analyst brings more to the table.
The CVA credential requires demonstrated valuation knowledge, an examination, and an applied-experience assessment. CVAs must also meet recertification requirements and follow professional standards.
A properly scoped valuation by an independent CVA can provide a stronger basis for lender review than an unsupported asking-price estimate: the reviewer can examine the reasoning behind the result.
| Question | Broker pricing estimate | Properly scoped CVA valuation |
|---|---|---|
| What is its purpose? | Often helps establish a listing or negotiating position. | Defines the purpose, intended users, and basis for the opinion of value. |
| What supports it? | May draw on local sales experience and market benchmarks; detail varies. | Documents relevant evidence, methods, adjustments, assumptions, and limitations. |
| Is it independent? | Check representation, compensation, and any interest in completing the sale. | Check independence and conflicts for the specific engagement; the credential alone does not establish them. |
| Will a lender accept it? | A listing estimate may not meet the lender’s appraisal requirements. | Confirm the analyst, engagement, and report meet the lender’s requirements before ordering. |
Some brokers also hold valuation credentials and produce rigorous reports. The meaningful distinction is the scope, evidence, and independence of the work—not a blanket judgment about brokers.
Credential and reporting background: CVA qualifications · NACVA standards. Lending policies: SBA guidance; requirements vary by lender and program.
Put a supported valuation
behind your next move.
Jackson Forrestall leads the firm’s Retirement & Valuation Services. His valuation work includes SBA lending, buy-sell agreements, litigation support, and other closely held business needs.
Buying, selling, or planning ahead? Ask Forrestall CPAs about the right scope, required information, timing, and fees for your practice.
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