Most dentists think about the value of their practice exactly once: the day they decide to sell. By then, it’s often too late to do much about it.

The dentists who walk away with the best valuations are the ones who understood what drives value years before they ever listed. They used that knowledge to make smarter decisions, build a more profitable practice, and ultimately sell from a position of strength rather than frustration.

We sat down with Barb Johns, a practice broker and transition consultant at Henry Schein Tier Three Brokerage, whose family founded Tier Three in 1982. She has helped hundreds of dentists value, grow, and sell their practices across Canada. Here’s what she told us about how dental practice valuation actually works and what most dentists get wrong.

Most dentists assume a practice appraisal is something you do when you’re ready to exit. Barb Johns sees it differently.

There are more reasons to get an appraisal than most dentists realize.

Think of it the way one of our clients did. He got a practice appraisal every two years,  not because he was planning to sell, but because it gave him a clear picture of where his practice stood compared to everyone else. Where was he strong? Where was he bleeding patients? Which metrics were pulling his value down?

Most business owners in other industries track their key metrics obsessively. Churn rate, customer lifetime value, acquisition cost. Dentists often don’t have that same visibility into their own numbers, partly because they’re in the chair all day and don’t have time, and partly because the data is scattered across the patient management system. 

A good appraisal fixes that. It gives you a baseline, benchmarks your numbers against hundreds of other practices, and tells you exactly where to focus if you want to build value.

The formula for practice value is simple on paper. Revenue minus expenses equals earnings. More earnings means more value.

 But most dentists trying to grow their practice value focus on the wrong things like new equipment, a renovation, a modern dental website. None of that moves the needle the way they think it does.

That’s the foundation. Everything else like your cost structure, your overhead, your write-offs, your staffing levels, all of it sits on top of that base. A practice with a strong, growing patient base and tight expenses is worth significantly more than one with high revenue and sloppy costs.

The two levers are straightforward: increase revenue and reduce costs. But the order matters. You can’t cut your way to a great valuation. You build it from the patient base up.

Think about it this way: If you’re spending less money but losing patients every year, your practice is worth less, no matter how clean the books look. Any serious buyer is going to look at your patient trends, not just your most recent revenue number. A practice where patients are leaving is a problem, and experienced buyers will spot it.

On the other hand, a practice with a growing patient base, patients coming back for their regular cleanings, and low attrition will sell for more even if the overhead isn’t perfect. Because the buyer can see the business is healthy and heading in the right direction.

Costs do matter though. Are you writing off co-payments you don’t have to? Is your discount policy eating into your income? Are you open at times that actually work for your patients? 

These are all real ways to put more money in your pocket. But none of them fix the real problem if patients are leaving. And a shrinking patient base is the one thing you can’t dress up to look good.

Walk into most conversations about dental practice value and someone will throw out a rule of thumb. “It’s worth about 70% of your annual collections.” Or “practices sell for six times earnings.” 

These shortcuts exist because valuation is genuinely complex  but relying on them without understanding what’s underneath them is how dentists leave money on the table or overpay for something that isn’t worth what they thought.

There are three main methods used to value a dental practice.

This is the most commonly cited method and the least reliable one. It takes your gross annual collections and multiplies it by a number, typically somewhere between 0.6 and 0.8, to get an estimated value. The problem is it ignores everything that actually matters.

Two practices can both do $800,000 in revenue. One has $600,000 in expenses. The other has $400,000. They are not worth the same thing. The revenue multiple treats them identically. That’s the problem.

This is the standard method used by serious brokers and appraisers. Instead of looking at your total revenue, it looks at your net earnings, what’s actually left after paying all practice expenses, not including the owner’s compensation. That number gets multiplied by a factor that reflects the quality and stability of the practice.

In Canada, Barb Johns says practices typically sell for “somewhere between five and 6.5 times earnings, give or take. Some go up to seven times, a little bit over seven times projected earnings.” 

In the US, doctor-to-doctor transactions typically fall in the range of 60% to 80% of annual gross collections or around 1.75 to 2.25 times seller’s discretionary earnings for practices under $2.5 million.

BizBuySell’s dental practice valuation benchmarks show that half of all practices sell for between 1.60 and 3.37 times earnings, a wide range that comes down entirely to the health of the practice.

Where your practice lands within that range depends on a long list of factors. Is the patient base growing or declining? Are there lease issues? Is the revenue driven by one dentist whose skills don’t transfer? Is the practice writing off co-payments it shouldn’t be? All of these push the multiple up or down

When you buy a dental practice, you’re not just buying the chairs, the X-ray machine, and the leasehold improvements. Those things have a straightforward dollar value, you can look up what a five-year-old dental chair is worth. That part of the valuation is relatively simple.

But most of what you’re actually paying for when you buy a dental practice can’t be itemized on an equipment list. You’re paying for the fact that 1,800 patients already trust this practice with their dental health. 

You’re paying for the reputation built up over ten or fifteen years in the community. You’re paying for the Google reviews, the referral network, the patients who bring their kids in and have been coming back every six months for a decade. That’s goodwill.

Henry Schein Tier Three Brokerage, one of Canada’s largest dental practice brokerages, uses a proprietary patient metrics platform that goes well beyond standard revenue analysis. 

What they consistently find when they do this kind of deep analysis is that patient goodwill often ends up being worth three times the value of the physical assets in the practice. That ratio tells you everything about where the real value in a dental practice actually lives.

Which means if you’re trying to understand what your practice is worth, the number that matters most isn’t what your equipment is worth. It’s how strong and loyal your patient base is.

Here’s why that matters practically. Two practices can have identical equipment, identical locations, and identical revenue. But if one has 1,800 patients with an attrition rate of 4% and strong hygiene recall, and the other has 1,800 patients with an attrition rate of 15% and patients who mostly come in once and disappear, the first practice is worth significantly more. The goodwill is real and measurable in the first one. In the second one it’s fragile and any serious buyer will see it immediately.

Goodwill is also what’s most at risk during an ownership transition. When a dentist retires and sells, some patients will leave simply because they had a personal relationship with the previous owner. 

A well-run transition with a proper handover period, patient communication, and a new owner who doesn’t immediately change everything can reduce that loss significantly. A badly handled transition can destroy years of built-up goodwill very quickly.

Research from dental transition specialists shows that a well-managed sale typically results in less than 10% patient attrition but that number climbs fast when the handover is rushed or poorly communicated.

So if you want to build goodwill in your practice (which is the same thing as building practice value) it comes down to the same things Barb Johns talks about throughout this article:

This is where most dentists get confused. They assume that spending money on the practice automatically increases what it’s worth. New chairs, a fresh coat of paint, the latest imaging equipment. It feels like investing in the business. Often it isn’t.

Barb Johns draws a clear line between two things that are easy to mix up: value and saleability.

A beautifully renovated waiting room might make your practice easier to sell. It doesn’t make it worth more. 

The same goes for equipment. Buying a $200,000 piece of technology three months before you sell doesn’t add $200,000 to your sale price. It might make the practice more attractive to buyers. But value is driven by earnings, and new equipment only moves the value needle if it actually generates more revenue.

So what does increase value? A few things, and they all connect back to the same foundation.

This is the single biggest driver of practice value. Not the number on your most recent bank statement. The size, quality, and trajectory of your patient base. Is it growing year over year? Are patients coming back for their hygiene recalls? What is your attrition rate?

Barb is direct about this: “Investing more into marketing to drive patients only makes sense if you’re actually retaining the patients that you’re gaining.” 

There is no point pouring money into new patient acquisition if patients are leaving out the back door at the same rate.  In fact, according to Dental Economics, the average dental practice loses around 25% of its patients every year, meaning one in four patients walks out the door before ever coming back.

Bill Henderson, former President of Tier Three Brokerage who has worked with thousands of dentists across Canada, makes a point that surprises a lot of dentists when they first hear it: your hygiene program matters more to your practice value than almost anything else.

“Every incremental dollar of hygiene you add to your practice is going to add significantly more to the value of the practice than every dollar of dentistry. To build a dollar in hygiene it costs you about 25 cents in hygienist labour. A dollar in dentistry, you’re paying 40 cents to the dentist and you’ve got a chairside assistant at about eight cents, you’ve got probably 10 cents in supplies. So compared to that dollar in hygiene yielding 70 cents in contribution, a dollar in dentistry is yielding about 40 to 45 cents.”

In plain terms: hygiene is more profitable per dollar than dental work. A practice that has built a strong hygiene program isn’t just providing better preventive care. It’s generating more money per dollar earned, with more predictable income month to month. And when a buyer looks at two practices doing the same revenue, the one with the stronger hygiene base will sell for more every time.

This one is consistently underrated. “Training your existing staff better is maybe more important than necessarily hiring new staff.” A receptionist who doesn’t know how to use the patient management system properly is quietly damaging your practice every day. Patients getting missed for recall. Opportunities not followed up on. Data that doesn’t reflect reality when a buyer comes in to do due diligence.

The practices that sell for the most don’t just have good clinical care. They have systems. The front desk knows exactly how to handle a new patient call, how to follow up on a cancellation and get that patient rebooked, how to reactivate a lapsed patient, how to keep the schedule full without gaps eating into the day. That kind of operational consistency shows up in the numbers and buyers can see it.

If your patient base isn’t growing the way your new patient numbers suggest it should, something is wrong with the experience. “If you’ve got an issue with patient retention and you’re not growing as much as you think you should based on your new patient counts, then maybe there’s something with the patient experience that isn’t working well.”

This doesn’t always mean clinical care. It often means how patients are treated when they call, how they’re greeted when they arrive, how easy it is to book an appointment. These are the things that turn a first visit into a loyal patient who refers their friends and family. 

Most practices lose new patients not because of bad dentistry but because nobody at the front desk knew what to say when someone called asking about price, or didn’t know the right questions to ask to make that person feel heard and want to book.

The biggest mistake Barb sees is dentists who wait until they’re ready to sell before thinking about any of this. By then there isn’t enough time to fix the things that matter. “Pre-plan. If you’re thinking of selling, at least three to five years beforehand, understand the issues that are impacting your value negatively and positively.”

Three to five years gives you enough time to actually move the needle on the things that matter. You can grow your patient base. You can fix your recall system so fewer patients fall through the cracks. You can tighten up your costs without cutting things that hurt the practice. You can build two, three, four years of clean financial history that shows a buyer this practice is healthy and heading in the right direction.

Six months doesn’t give you any of that. Six months is enough time to maybe paint the walls and clean up your books. It is not enough time to change the story your numbers are telling.

A lot of dentists treat a practice appraisal the way they treat a will. Something they know they should probably have but keep putting off until something forces the issue. By then the timing is rarely ideal.

Barb Johns makes the case for getting one much earlier than most dentists think. And more than once.

The value of an appraisal isn’t just the number it produces. It’s the picture it gives you of where your practice actually stands compared to everyone else. “Your appraiser is going to squeeze out every potential dollar value in your practice. That’s their job. And they’re going to give an unbiased opinion and they do not have an agenda because your appraiser is not the person who’s going to implement any changes you need.”

That objectivity is the point. Your accountant wants to save you taxes. Your marketing company wants to bring you new patients. Your broker wants to sell your practice. An appraiser has no stake in what you do next. They just tell you what the numbers say.

Getting a second appraisal a few years after the first one is also worth doing. “The best thing about most appraisals is you can get an update in two or three years at a really nominal cost which will allow you to actually see the impact of any improvements you put in place.” 

In other words, you make changes based on the first appraisal, then come back and measure whether those changes actually moved the needle. One thing Barb is firm about: use a dental specific appraiser. Someone who does dental practices and only dental practices. “Your regular lawyer if he’s not dental industry specific, your regular accountant if he is not dental industry specific, they just cannot handle your practice valuation nor your sale nor your purchase.”

The reason this matters so much is that dental practices have very specific characteristics that a generalist simply won’t understand. The way patient goodwill is valued. What a normal attrition rate looks like, what hygiene percentages should be, what a healthy earnings multiple is for your market. 

A dental specific appraiser has seen hundreds of practices and knows immediately what looks normal and what doesn’t.

Finally, whatever an appraisal says, be honest with it. If there are problems in the practice, disclose them. “If you do not have time to fix things because you don’t have a lot of time and you kind of want to sell tomorrow, then you might not have time to fix everything. But then you’ve got to share everything. You’ve got to disclose it.” Trying to hide problems in an appraisal that ends up forming the basis of a sale agreement is how dentists end up in litigation after the fact.

And on a more practical note, get at least one appraisal done partway through your career and put a copy with your will. If something unexpected happens to you, your family will need it. “Get at least one done partway through your career and if you buy a practice maybe get one done five years into your ownership so you can see where you are now versus what the value was when you purchased the practice. But get at least one and put it with your will.”

Everything in this article comes back to one thing: your patient base. The size of it, the quality of it, and the direction it’s heading. That is what drives your practice value more than anything else. More than your equipment, more than your location, more than how recently you renovated the waiting room.

And the fastest way to move that number in the right direction is to get more good patients through the door and keep them coming back.

We worked with a practice that was seeing just 9 new patients a month. Their active patient count was flat, their recall was weak, and their practice value was quietly declining year over year. We came in, rebuilt their marketing, and worked with their front desk team on how to handle new patient calls, how to present treatment, and how to keep patients coming back for their hygiene appointments.

Twelve months later they were seeing 90 new patients a month. Quality patients who were accepting treatment, coming back for their cleanings, and referring their friends and family. Their active patient count was growing, their hygiene program was stronger, and their practice value was heading in a completely different direction.

The numbers in their practice didn’t change because they bought new equipment or renovated the office. They changed because more of the right patients were coming in, staying, and coming back.

If you want help growing your patient numbers, that’s exactly what we do at RevUp Dental. We have an end-to-end philosophy, which means we don’t just bring patients to your website and call it a day. 

We give you the visibility to get found online, we drive quality traffic to your practice, and we work with your front desk team to make sure more of those patients calling actually book an appointment. 

On top of that, we track how your marketing is performing and how well your team is converting calls, so you always know what’s working and what isn’t. Think of it as a full growth system with built-in accountability.

Buying a dental practice is one of the biggest financial decisions you’ll ever make. Most dentists treat the legal side as a formality. Something to handle at the end, once they’ve already decided they want the practice.

Michael Kutner thinks that’s exactly backwards. Michael is a founding lawyer and principal at KPK Law, one of Canada’s most recognized firms in dental practice transactions. He’s represented buyers and sellers across hundreds of practice transitions, and the mistakes he sees aren’t rare. They’re predictable. And most of them happen because dentists didn’t get the right advice early enough.

We sat down with him to find out what he wishes every dentist knew before signing anything.

The first thing Michael wants to change is the sequence. Most buyers find a practice, fall in love with it, make an offer, and then call a lawyer. By that point, they’re already emotionally committed. The due diligence feels like a checkbox.

His advice: the moment you receive the appraisal document, send it to both your lawyer and your accountant before you do anything else. Before you make an offer. Before you shake hands. Before you tell the seller you’re interested.

The appraisal tells a story. A good dental lawyer and a good dental accountant will read that story very differently than you will. They’ll spot things you won’t. And catching those things before you’re committed is a lot cheaper than catching them after.

He’s also firm about one thing: you need a lawyer who specializes in dental practice transactions. Not a friend who does real estate. Not a general corporate attorney.

Dental practice purchases have details that general lawyers miss. How co-payments are handled. Infection prevention and control requirements. How staff termination works in a practice transition. The nuances are specific, and getting them wrong can cost significantly more than the legal fees you were trying to avoid.

Due diligence is where you find out what you’re actually buying. And it takes time.

A proper due diligence period for a dental practice is 90 to 120 days. That’s not a negotiating position. That’s the reality of how long it takes to properly review financials, patient records, staff contracts, the lease, supplier agreements, and everything else that comes with the practice.

Sellers sometimes push back. They want to close faster. They have other interested buyers. Michael has seen the urgency used as a tactic, and he’s seen dentists skip steps because of it. That almost never ends well.

If a seller is pressuring you to rush through due diligence, that’s a red flag on its own. A practice with nothing to hide doesn’t need to close in a hurry.

When you buy a practice, you’re not just buying a patient list and some equipment. You’re inheriting a team. And that team comes with obligations you need to understand before you sign.

Long-term employees are the biggest one. In Ontario, the standard for termination without cause is roughly one month of notice or pay for every year of service. A receptionist who’s been at the practice for 15 years and doesn’t work out for you six months after you take over is a significant liability.

That doesn’t mean you shouldn’t buy a practice with long-tenured staff. It means you need to know what you’re walking into. Your lawyer should review every employment agreement before closing. If there are no written contracts, that’s worth knowing too, because verbal arrangements and implied terms still carry legal weight.

Michael also flags vendor and supplier contracts. Many practices have ongoing agreements with labs, financing companies, or equipment suppliers. Some of those agreements transfer to you automatically. Some don’t. Know what you’re inheriting and what you’re not.

A lot of dentists buy a practice without fully understanding the lease on the space. That’s a serious mistake.

The specific clause Michael wants you to look for is a demolition or relocation clause. These clauses give the landlord the right to terminate your lease if they decide to redevelop the building. They used to be rare. They’re not anymore. Depending on the market, you might find them in close to half of commercial dental leases.

If your lease has one of these clauses and the landlord exercises it, you could be forced to move your entire practice with relatively little notice. That means construction costs, downtime, patient disruption, and the very real risk that not all of your patients follow you.

Beyond demolition clauses, look at the length of the remaining lease term and whether there are options to renew. If the lease expires in two years and the landlord doesn’t have to renew it, that’s a problem. You need enough runway to recoup your investment.

Your lawyer should review the lease in full.

Every dental practice purchase should include a non-compete and non-solicitation agreement with the selling dentist. This is not something to get casual about.

Michael has seen buyers skip this or accept vague language because they trust the seller. They’ve worked together. They have a good relationship. The seller promises they’re retiring and have no interest in practicing nearby.

That may be true today. It may not be true in two years when they get restless. A properly drafted non-compete defines a specific geographic radius and a specific time period. It covers both direct competition and patient solicitation. And it’s enforceable.

Without it, there’s nothing stopping the previous owner from opening a new practice down the street and calling every patient they know by name. You’re buying their goodwill. Protect it.

This is a conversation to have with your lawyer and accountant together, and it should happen early.

In an asset deal, you’re buying specific assets of the practice. Patient charts, equipment, the lease, goodwill. The liabilities of the old business generally don’t follow you.

In a share deal, you’re buying the corporation itself. That means you’re inheriting its full history, including any liabilities that might surface later. Past billing issues. Unresolved patient complaints. Employment disputes that haven’t become claims yet.

Most buyers prefer asset deals for exactly this reason. But the structure isn’t always simple, and there are tax implications on both sides. Get the right people in the room early and make sure you understand what you’re agreeing to before you sign.

One of the things dentists don’t always think about when buying a practice is what happened before they arrived.

If the previous owner had a patient complaint filed against them that hasn’t been resolved, and you’ve now taken over that practice, the situation is complicated. Depending on the structure of the deal and how it’s documented, you may have some exposure to the history of the practice even if you had nothing to do with it.

Michael recommends asking directly about any outstanding complaints, regulatory issues, or college investigations during due diligence. If the seller is reluctant to disclose, that tells you something. If there are open matters, your lawyer needs to assess the risk before you close.

Michael’s final piece of advice isn’t legal. It’s practical. And it comes from watching what happens when buyers move too fast after closing.

The patients in that practice are loyal to the previous dentist. Not to the practice. Not to you. You earn that loyalty over time, and the fastest way to lose it before you’ve had a chance to build it is to walk in and immediately start changing things.

New software. Staff terminations. Aggressive treatment planning. Patients who just met you presenting a treatment plan the previous dentist never mentioned. All of these things accelerate patient attrition in ways that are hard to reverse.

Michael recommends giving yourself six months to a year before you feel like the practice is truly yours. Use that time to get to know the team, understand how things work, and let patients get comfortable with you. The seller should stay on for at least six months during that transition. Their presence helps patients trust you in a way nothing else can.

The deal is just the beginning. The transition is where you either win or lose the practice you just paid for.