Last month, we discussed the reasons your practice may be more valuable than you think using traditional valuation approaches. Below, practice transition expert Roger K. Hill* explains how his new Dental EBITDA Plus^™ approach can create higher values for practices with above-average profitability and growth potential.

Determining Adjusted EBITDA

Hill says that corporate (DSO) buyers usually determine their purchase price offer based on a multiple of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) after payment of overhead and reasonable compensation to the doctor(s). Likewise, his new approach for traditional sales (doctor to doctor transactions or D2D) also begins with calculating EBITDA, though there may be some minor differences in the expenses added back to determine the true earnings (profitability) of the practice. For example, while expenses such as accounting, payroll processing, retirement plan administration, etc. may be added back to profit in a corporate (DSO) deal since they would be eliminated, these expenses would likely continue to be