Maximising Your Dental Practice Valuation: Expert Tips for a Profitable Sale

Maximising Your Dental Practice Valuation: Expert Tips for a Profitable Sale in the UK

When it comes to selling a dental practice, one thing reigns supreme: profitability. The more profitable your practice is, the more you’ll get for it - plain and simple. No matter what anyone else tells you, Buyers are laser-focused on acquiring a solid EBITDA (that’s Earnings Before Interest, Taxes, Depreciation, and Amortisation for the uninitiated). It’s the ultimate measure of your practice’s financial health, and it’s what drives serious buyers to the table.

Understanding Dental Practice Valuation

In basic terms, practice valuations are calculated as follows:

Valuation = EBITDA X Multiple

• EBITDA: This is a profitability measure, reflecting the financial health under the owner’s management.
• Multiple: This factor is based on market conditions and is influenced by factors such as desirability, location, revenue streams and expansion potential.

The bottom line is that EBITDA is what gets buyers excited. This number speaks louder than anything else. The multiple is the element that we at Mayfield Practice Sales can influence the most. We know the buyers, we know what they’re looking for, and we know how to entice offers by playing to their priorities. It’s no longer about a one-size-fits-all, generic valuation. You need to tailor your marketing strategy, and at Mayfield Practice Sales, we always think three steps ahead to achieve the highest purchase price.

It’s not just about selling; it’s about selling smart.

Dental Market Dynamics

Whilst much of the discussion focuses on EBITDA, for most buyers, the real focus is on yield—the net return they can expect from their investment. Over the last 18 months, the market has undoubtedly slowed due to rising capital costs. Borrowing large sums to acquire a UK dental practice now means higher interest rates, resulting in steeper annual repayments and leaving less return in hand. On top of this, corporation tax has jumped from 19% to 25% (with a tapered rate applying to smaller businesses).

Additionally, the cost-of-living crisis has forced many employers to raise wages at a pace higher than inflation in order to retain support staff in an undersupplied labour market. These combined factors have made buyers more cautious and selective in their acquisition strategies, limiting the number of active participants in the market.

For individual associates considering the leap to practice ownership, the prospect can be daunting. Many are realising that the large annual repayments required to finance an acquisition could significantly reduce their earnings, making the move from associate dentist to Principal less financially attractive.

How to Maximise Your Value

Independent buyers and small dental groups continue to dominate the market, seeking practices that offer sustainable growth potential. Whether it’s through expanding the range of treatments, boosting marketing efforts, or adding an additional surgery, buyers are looking for opportunities to enhance profitability. As a seller, understanding what drives buyer interest and strategically positioning your practice can significantly boost its valuation. In a competitive market, it’s crucial to stand out—and that’s where we come in.

At Mayfield Practice Sales, we bring more than just market expertise to the table - we’ve been in your shoes. Every member of our team has owned and managed a dental practice, so we understand the intricacies of the business from the inside out. We know what it takes not only to run a successful practice but also how to position it for maximum value.

When you work with us, you’re partnering with experts who don’t just know the market; we know how to make it work for you. Whether it’s boosting your EBITDA, helping you find cost savings, or tailoring your practice’s unique story to attract the right buyers, we’re committed to delivering the best possible outcome. Our hands-on experience means we can offer practical advice on everything from efficient workflows to introducing profitable new treatments—ensuring that your practice stands out in the competitive marketplace.

The One Key Step to Maximise Your Dental Practice Valuation

Get your financials in top shape

Yes, other factors may play a role to some extent, but this is the one that truly moves the needle. Sounds simple enough, right? As the leading provider of Dental Financial Due Diligence in the UK, we are constantly amazed at how often offers are made based on out-of-date or inaccurate data hastily thrown together. It's as if the seller decides they want to sell on a Monday, and by Friday, a valuation is slapped together.

The result? More often than not, it leads to an unrealistic valuation. The practice sits unsold, negotiations turn into a tug-of-war over the price, or worse - deals fall apart entirely at the Financial Due Diligence stage. This happens far more often than you’d think. You need to avoid this at all costs. Otherwise, you risk wasting time and thousands in legal fees.

At Mayfield Practice Sales, we operate as project managers. Our first step is to thoroughly examine your financials, assist in getting these in order, and really get under the bonnet of your business. Then we can proceed in working with you to find ways to maximise the value.

For instance, one of the ways we add value is by assessing whether goodwill lies with the business or the Principal. We then implement strategies to shift patient loyalty and revenue towards the practice itself, building stronger buyer confidence and ultimately driving a higher valuation. This is just one example of how we can help optimise your practice’s worth.

In short, clean, transparent financial records not only give buyers confidence in your practice’s value but can actively increase it. This also streamlines the financial due diligence process, ensuring a quicker, smoother transaction. And while getting your financials in perfect order might seem daunting, rest assured—we’re here to support you every step of the way.