Do you know the value of your dental practice?
Most dentists don’t.
(Based on 12 Months of Financials)
The purpose of this worksheet is to show you an example of what your practice value may look like. Each practice is unique
and there are many variables to consider in calculating the true value of each practice including: appropriate cap rates,
discount rates, included and excluded expenses. The value you determine on your own may differ from the valuation done by
Benevis or any other valuation/appraisal company. Benevis offers a free, transparent, in-depth valuation of your practice
upon request.
After you’ve completed this worksheet, you may have questions or need help. Call Benevis at (844) 879-0087, or visit
www.benevis.com for more information and to see if your practice is a good fit.
Step 1 – Determine Your Net Income
Once you have determined your Net Income, you can calculate your practice value using the methods in Step 2 and Step 3.
$_____________________________________
Total Gross Collections
(Subtract)
$_____________________________________
Expenses (Not including interest, taxes, depreciation, amortization,
personal expenses and any compensation for the owners)
(Subtract)
$__________240,000_________________
$_____________________________________
Industry Standard Pay for Owner Dentist
(This number varies by area and specialty)
=
Net Income (This number goes into Steps 2 & 3)
Step 2 - Capitalized Earnings Method
The basis of this valuation method is the practice’s prior year’s (or average of the last few years) net income. That number is
divided by a cap rate (industry standard is 25-31%) to get the fair market value of a practice.
$_____________________________________
=
Net Income (From Step 1)
(Divide Net Income by 0.25)
(Divide Net Income by 0.31)
$_____________________________________
High End of Practice Valuation
$_____________________________________
Low End of Practice Valuation
Page 2
Step 3 – Discounted Cash Flows Method
This valuation method projects 10 years of net income (EBITDA) and then calculates the net present value of that income. The
projected cash flows are based on a reasonable growth rate of collections and associated practice costs each year and then
discounted by the assumed cost of capital + risk premium. For dentistry this ranges from 23-31%.
$______________________________
=
Net Income (From Step 1)
Net Income Year 1
=
$_____________________________________ (Multiply Net Income by 1.02)
Net Income Year 2
=
$_____________________________________ (Multiply Net Income Year 1 by 1.02)
Net Income Year 3
=
$_____________________________________ (Multiply Net Income Year 2 by 1.02)
Net Income Year 4
=
$_____________________________________ (Multiply Net Income Year 3 by 1.02)
Net Income Year 5
=
$_____________________________________ (Multiply Net Income Year 4 by 1.02)
Net Income Year 6
=
$_____________________________________ (Multiply Net Income Year 5 by 1.02)
Net Income Year 7
=
$_____________________________________ (Multiply Net Income Year 6 by 1.02)
Net Income Year 8
=
$_____________________________________ (Multiply Net Income Year 7 by 1.02)
Net Income Year 9
=
$_____________________________________ (Multiply Net Income Year 8 by 1.02)
Net Income Year 10
=
$_____________________________________ (Multiply Net Income Year 9 by 1.02)
Terminal Net Income
=
$_____________________________________ (Multiply Net Income Year 10 by 1.02)
Apply a low discount rate of 23%
Use this calculation if your practice has up-to-date equipment/office space, located in a desirable neighborhood within large metro areas.
(Net Income)
(Discount Factor)
Present Value Free Cash Flows
Year 1
1.3
$_________________________________________
Year 2
1.6
$_________________________________________
Year 3
2.0
$_________________________________________
Year 4
2.4
$_________________________________________
Year 5
3.1
$_________________________________________
Year 6
3.8
$_________________________________________
Year 7
4.8
$_________________________________________
Year 8
6.0
$_________________________________________
Year 9
7.5
$_________________________________________
Year 10
9.3
$_________________________________________
Terminal Net Income
9.3
$_________________________________________
Sum Total:
$____________________________________
(High End of Practice Value)
Apply a high discount rate of 31%
Use this calculation is you practice has outdated equipment/office space, located in less desirable neighborhoods within more rural areas.
(Net Income)
(Discount Factor)
Present Value Free Cash Flows
Year 1
1.3
$_________________________________________
Year 2
1.7
$_________________________________________
Year 3
2.2
$_________________________________________
Year 4
2.9
$_________________________________________
Year 5
3.9
$_________________________________________
Year 6
5.1
$_________________________________________
Year 7
6.6
$_________________________________________
Year 8
8.7
$_________________________________________
Year 9
11.4
$_________________________________________
Year 10
14.9
$_________________________________________
Terminal Net Income
14.9
$_________________________________________
Sum Total: $____________________________________
(Low End of Practice Value)