Happy Friday! Hope the week is treating you well.
We get one question more than any other:
"What is my practice actually worth?
It sounds simple. But the answer has more moving parts than most owners realize — and understanding those parts is the difference between accepting a lowball offer and walking away with the number your practice deserves.
This week, we're pulling back the curtain on exactly how buyers calculate your valuation.
The Formula Buyers Use (It's Simpler Than You Think)
At its core, practice valuation starts with one equation:
EBITDA × Multiple = Enterprise Value
EBITDA = Earnings Before Interest, Taxes, Depreciation & Amortization (essentially your practice's true operating profit)
Multiple = The number buyers are willing to pay per dollar of EBITDA, based on risk, growth, and market demand
Enterprise Value = The headline number in your LOI
So a practice doing $1M EBITDA at a 10x multiple = $10M offer.
Simple enough. But here's where it gets interesting — and where most owners leave money on the table.
Your EBITDA on your tax return is almost never your real EBITDA in a sale.
Buyers (and their QofE teams) will normalize your financials to reflect what the practice truly earns as a standalone business. This means adding back legitimate owner-specific expenses that won't exist post-sale.
Common add-backs that increase your EBITDA:
Owner salary above market rate (e.g., if a replacement provider would cost $200K but you pay yourself $400K, $200K gets added back)
Personal expenses run through the business (vehicle, travel, insurance)
One-time, non-recurring costs (a major equipment purchase, legal fees, renovation)
Family member salaries that aren't arms-length market comp
Depreciation on equipment already fully paid off
Illustrative example:
Multi-location med spa, Florida. Tax return shows $650K net income. After add-backs (owner excess comp $150K, personal vehicle $18K, one-time renovation $80K, depreciation $52K), normalized EBITDA = $950K. At a 10x multiple, that's a $3M difference in enterprise value.
This is why getting your EBITDA right — before a buyer's QofE team does it for you — is so critical.
What Pushes Your Multiple UP
Not all practices trade at the same multiple. Here's what buyers pay a premium for:
Scale: Multi-location practices command higher multiples than single-location. Buyers are acquiring infrastructure, not just revenue.
Specialty: High-demand specialties (med spa, oral surgery, dermatology, vascular) attract more buyer competition — competition = higher multiples.
Revenue growth: A practice growing 15% year-over-year gets a better multiple than a flat one. Buyers are paying for the future, not just today.
Owner independence: If the practice runs well without you in the chair every day, buyers pay up. (More on this below.)
Strong payer mix: Fee-for-service or out-of-pocket revenue is valued higher than insurance-heavy practices. Less reimbursement risk = better multiple.
Geography: High-growth markets (Southeast, Southwest, suburban metro areas) attract more buyer interest and better pricing.
Clean financials: Practices with well-organized books, clear add-backs, and no compliance red flags close faster and at higher multiples.
What Pushes Your Multiple DOWN
These are the factors buyers use to justify a lower offer — or retrade after diligence:
Owner dependency: You produce 70%+ of revenue and patients follow you personally. Buyers see this as risk.
Revenue concentration: One location, one provider, one referral source, or one payer = concentration risk = discount.
Declining revenue: Even a single bad year creates questions. Two bad years can cut your multiple significantly.
Deferred maintenance: Outdated equipment, aging facility, or outdated tech stack all signal future capital needs buyers will price in.
Compliance issues: Billing irregularities, licensing gaps, or unresolved legal matters create uncertainty — buyers price that uncertainty heavily.
Messy financials: If your books take 3 months to untangle, buyers assume there's something to hide.
ILLUSTRATIVE SCENARIO: Two Dental Practices, Same Revenue, Very Different Multiples
ILLUSTRATIVE SCENARIO — Two dental practices, Midwest, both with $900K EBITDA
Same EBITDA. $3.15M difference in value. Entirely driven by how buyers perceive risk and growth potential.
The Number Most Owners Don't Know
Here's a difficult truth: most practice owners have no idea what their practice is worth today.
They might have a rough number in their head — based on what a colleague sold for, or what a buyer mentioned on a cold call. But that number is rarely accurate, and almost never optimized.
The practice owners who get the best outcomes are the ones who:
Know their real, normalized EBITDA before going to market
Understand which factors in their practice are pulling their multiple down
Fix those factors before a buyer can use them to renegotiate
Run a competitive process so no single buyer controls the pricing
The Fix
At Viper Partners, one of the first things we do with every client is a valuation analysis — we normalize your EBITDA, identify your likely multiple range based on your specialty and market, and tell you exactly where a buyer will push back.
No obligation. No pressure. Just clarity on what your practice is actually worth — and what it could be worth with the right preparation.
Keep winning,
Viper Partners
Seller-Exclusive Healthcare M&A Advisory
Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. All scenarios are illustrative. Consult your legal and tax advisors regarding your specific situation.
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