With one or two dental offices, your dental practice's value will be based on a percentage of collections—say 80%. But when you get to three or more dental practices the valuation method changes to an EBITDA valuation. EBITDA = Revenue – Expenses (excluding interest, taxes, depreciation and amortization). With this change in valuation methods your dental offices together could be worth more than 100% of collections or 3-6 times EBIDTA depending on the number of locations (3 or more is optimum), profitability, location, and dental specialty. When a large DSO adds your dental practices to their portfolio the value of your dental practice to a DSO could be 2-3 times what they paid you for it. When they aggregate the EBIDTA numbers the dental practices become much more valuable as a larger group.
These numbers sound good, but not every DSO or regional group is a good match or the the right buyer for your dental practice. There are a select few groups who really do care about the dentist's transition as well as their staff, and really do know what they are doing with regards to a large multi-office dental transition. By having a short consultation with Chris Vandiford it will be clear which direction to take and which buyer may be the right fit for your dental transition.