Buying a dental practice: what it costs, how it's valued and how buyers fund it

Search for “how much is a dental practice worth” and you’ll find American valuation blogs quoting 5 to 7 times earnings, or Australian advisers who politely decline to give a number. Neither helps a dentist standing in a surgery they’re thinking of buying.

This guide gives you the Australian signal that does exist, shows how to test the figures behind it, explains how the price splits into parts that are funded differently, and sets out what to line up before you make an offer. Where something is an example, it is labelled illustrative and describes no real practice.

What does it cost to buy a dental practice in Australia?

The most useful public benchmark comes from BDO Australia’s healthcare team. In a September 2025 review it reported that private dental practice sales are transacting at around 4x EBITDA, a level that has been relatively stable. It also noted that the industry was worth about $13 billion in 2025 and that about 90% of clinics are still owner-operated.

EBITDA is earnings before interest, tax, depreciation and amortisation. In a practice, it is the profit left after paying everyone, including a market wage for the principal’s own clinical work. That last part matters, and we’ll come back to it.

Two other numbers help you frame the price:

• Starting from scratch is expensive. BDO puts start-up costs at $600,000 to $650,000, which is one reason buyers are leaning towards established practices and why strong-goodwill practices attract modest upward pressure on price.
• Corporate buyers pay more, for a different product. BDO reports corporate acquisition multiples of 5.5x to 6.5x, typically for practices with at least three surgeries, a principal contributing under 35% of billings and EBITDA of at least $200,000. Most of those deals pay 75% to 80% up front with a three to four year earn-out. A single-dentist practice shouldn’t expect that multiple.

Treat 4x as a conversation starter. 42 Advisory says plainly that no reliable earnings multiple applies across every practice. The multiple moves with what sits behind the earnings.

What pushes the multiple up or down?

Factor	Tends to support a higher price	Tends to pull the price down
Owner dependence	Several long-serving clinicians; principal under a third of billings	One dentist; goodwill may leave with them
Surgeries	Three or more, with room to add	One to one-and-a-half surgeries (BDO says these are finding it harder to compete)
Lease	Long term with options, landlord consent likely	Short remaining term or no options
Patient book	Strong rebook rates and recall system	Falling active patient numbers
Location	Regional practices can report materially higher profitability (BDO cites 20% to 30% over metro)	Heavy local competition
Earnings trend	Stable or rising over three years	Margin slipping; BDO notes EBITDA as a share of billings has fallen 5% to 10% in many practices

If you’re buying your first practice, the first row is the one that decides whether a lender is comfortable.

Which add-backs should you test line by line?

The seller’s accountant will present adjusted earnings. Each adjustment is called an add-back, and each one raises the price you’re asked to pay. 42 Advisory recommends testing them line by line, particularly:

• Family wages. Is a relative on the payroll doing real work, or is it a distribution?
• Personal expenses run through the business.
• Below-market rent from a related landlord. If the vendor owns the building through another entity and charges low rent, your rent will rise after settlement and your true earnings are lower than the accounts show.
• The owner’s own pay. If the principal drew a low wage because profit was the reward, the maintainable earnings should be reduced by a market clinical wage.

Ask for at least three years of normalised accounts, and have your own accountant review them. Our practice due diligence checklist covers the wider review; this is the part that moves the price.

How does the price split between goodwill, equipment and fit-out?

A purchase price is not one lump. Splitting it matters because each part is funded, and deducted for tax, differently.

Illustrative example. A practice with maintainable EBITDA of $220,000 prices at roughly 4x, or $880,000. The contract allocates it like this:

Component	Illustrative amount	Typical funding approach
Goodwill	$600,000	Business loan; lender tests the earnings behind it
Chairs and sundry equipment	$90,000	Asset or equipment finance
Imaging	$120,000	Asset or equipment finance
Fit-out and fixtures	$70,000	Part of the business loan or a separate facility
Working capital (on top of price)	$80,000 to $120,000	Cash reserve or line of credit

The allocation is negotiable within reasonably attributable market values, and buyer and seller want opposite things: the buyer prefers more allocated to depreciable equipment, while the seller may prefer more as goodwill. An independent equipment valuation protects both sides.

On tax, 42 Advisory notes that equipment items under $20,000 each may be immediately deducted under the instant asset write-off for small businesses with turnover under $10 million (see the ATO’s page). Larger items such as imaging usually go into the small business pool. Goodwill generally isn’t depreciable. It becomes your cost base for a future sale. Our guide to the instant asset write-off for clinics explains the detail.

Is the sale GST-free, and what can go wrong?

Often yes, as the sale of a going concern. The ATO lists the key conditions: the sale is for payment, the buyer is registered or required to be registered for GST, and both parties agree in writing that it is a going concern. The seller must also supply everything necessary to continue operating the business, and carry it on until the day of supply.

The cost of getting it wrong is real. 42 Advisory gives an example of an $800,000 purchase where a failed exemption with a GST gross-up clause means an extra 10%, or $80,000, payable at settlement and recoverable later through the BAS. That is a cash-flow problem on settlement day even if the money comes back. Ask your lawyer to settle the clause before exchange, and make sure your funding figure allows for it if there’s any doubt.

Should you buy assets or shares?

For most dental purchases, assets. In an asset purchase your entity acquires goodwill, equipment and patient records and starts with a clean tax history. A share purchase means taking on the company’s entire history, including any tax exposure, so it needs deeper due diligence.

Decide the buying entity before you sign. Company, trust or a combination each has consequences for asset protection, how profits are distributed and what a lender will want in terms of guarantees. It is far easier to set up at purchase than to restructure later.

How do buyers fund a dental practice purchase?

Most funding stacks have three layers.

1. Goodwill and fit-out. A business loan. Lenders look at collections, chair days, active patients, the associate mix and how long the principal will stay to hand over. Property-secured business loans run from $20,000 to $5,000,000; unsecured options typically run from $5,000 to $500,000, sized on turnover and bank statements. A purchase larger than the unsecured range usually needs property security. See our dental practice finance page for how this works.
2. Equipment. Chairs, scanners and sterilisation gear can be funded as assets, with terms matched to useful life. Our dental equipment finance page covers it, and the fit-out and equipment calculator helps size an upgrade planned for after settlement.
3. Working capital. The gap between settlement and the first full month of collections, plus a buffer if an associate leaves. This is the layer buyers most often forget, and it’s what stops a good purchase from feeling tight in month two.

If you’re buying the building as well, that is a separate decision, covered under practice premises loans. If you’re buying a share of a practice rather than all of it, see practice buy-in loans.

If you’re weighing a purchase, you can see whether finance is realistic before you make an offer. It takes about 60 seconds.

What should you do before making an offer?

1. Get an independent valuation and your own accountant’s view of normalised earnings.
2. Confirm who stays. Ask which clinicians intend to remain and for how long, and whether the vendor will do a handover period or hold back part of the price against retained revenue.
3. Check the lease and landlord consent timeline early.
4. Settle the GST and structure questions with your lawyer and accountant.
5. Find out what you can borrow against the specific numbers before the contract is signed, not after.
6. Allow for a working capital buffer on top of the purchase price.

Buying a practice is the big step; the business side doesn’t have to be hard

You’ve spent years building clinical skill. Buying a practice asks you to use a different one: reading someone else’s numbers and putting them together with a lender’s view of them. That’s what we do every day for dentists and other practice owners.

An enquiry takes about 60 seconds and there’s no credit check when you enquire, so asking what’s possible won’t touch your credit file. We don’t send your details to a pile of lenders. A real person on our team reads your situation and calls you to talk through the options. The more accurately you fill in the form (the price, the structure, what’s being bought and your own trading history), the more likely we are to match the right option first time.

Check your options for buying a practice →