Every valuation is an argument dressed as a number. This guide takes an £850,000 practice offered at £1,020,000, rebuilds the earnings the way a buyer's accountant does, and shows why the answer lands closer to £560,000 — and which assumptions are worth attacking.
Guide · Updated August 2026
Adjusted EBITDA × a multiple is the standard basis for private and mixed practices — and for anything a corporate group might buy. Earnings are adjusted ("add-backs") to show what a new owner would really receive, then multiplied by a factor reflecting size, quality and risk. Percentage of gross fee income survives as a shorthand for predominantly NHS practices, where the contract makes revenue highly predictable.
Both routes end up at the same question, and it is not the multiple. It is: how much profit will still be there once the current owner has walked out of the building? Everything below is a way of answering that in pounds.
Illustrative figures. A mixed practice with fee income of £850,000. The sales pack shows adjusted EBITDA of £170,000 — 20% of fee income — and the asking price is six times that: £1,020,000. The £170,000 is reached by adding back the principal's £120,000 of drawings, £14,000 of car and personal costs, and a £9,000 "one-off" legal fee.
Now rebuild it the way a buyer's accountant does. Three corrections:
Buyers spend most of their negotiating energy on the multiple and almost none on the earnings, which is precisely the wrong way round. On the rebuilt figure of £93,400, moving the multiple by half a turn is worth £46,700. Correcting the £72,000 clinical understatement was worth £432,000 at the same six times. The earnings argument is roughly nine times the size of the multiple argument, and it is the one settled by evidence rather than opinion.
The same asymmetry works for sellers, which is the point of section six. Every £1 of sustainable profit you can prove is worth several pounds of price. Every £1 of profit that exists only because your own clinical hours are free is worth nothing at all.
The headline price is not one asset. In an asset purchase it is split across goodwill, equipment and fittings, and stock, and the split has consequences the buyer should negotiate rather than accept. Equipment attracts capital allowances — the annual investment allowance gives full relief on up to £1,000,000 of qualifying plant and machinery in a year, which on a practice carrying chairs, a CBCT scanner and a decontamination room is real money in year one. Goodwill does not behave the same way, so a seller pushing value towards goodwill and a buyer pushing it towards equipment are having a tax argument, not an accounting one. Agree the apportionment in the heads of terms, before anyone's solicitor has drafted around it.
In a share purchase none of this arises in the same way: the buyer takes the company as it stands, with its history, its contracts and its liabilities. That is why buyers usually prefer assets and sellers usually prefer shares — and why the choice is a pricing point. Our guide to buying a practice step by step works the difference through in full.
Yes — because the thing being valued is future earnings, and NHS dentistry is run on four different systems. A buyer, a lender and a corporate acquirer will each read your NHS income through the rules of the nation it comes from, so "how much is my dental practice worth" has a slightly different answer in Cardiff than in Liverpool.
None of this changes the arithmetic of a multiple. What it changes is the confidence a buyer has in the earnings the multiple is applied to — and that is where regional value is actually won or lost. Our location pages set out how each nation's system works.
Most of the factors above respond to two or three years of deliberate preparation — documenting associate arrangements, diversifying income, reducing your personal clinical dependence, cleaning the cost base. The reason it takes years rather than months is that buyers weigh three years of accounts and weight the most recent most heavily, so an improvement made this quarter does not become price until it has lived through a full set of accounts and repeated itself.
Worked example — illustrative. Take the same practice. Over two years the owner recruits an associate to cover one of their two clinical days and re-cuts the nursing rota, adding £30,000 of profit that survives their departure. At six times, the price moves by £180,000. After Business Asset Disposal Relief at 18%, that is £147,600 in the owner's hand — for a change that cost nothing but attention, and had to be made two years early to count. Our benchmarks guide sets out which ratios to move first, and the two-year exit plan covers the sequence.
A valuation you cannot keep is not a valuation. On a share sale the gain is taxed on you personally. Business Asset Disposal Relief charges 18% on qualifying gains for disposals from 6 April 2026 — up from 14% for 2025/26 disposals and 10% before 6 April 2025 — and is capped at £1 million of gains across your lifetime, a limit that has applied since 11 March 2020. Gains above the limit, and gains that do not qualify, are taxed at 24%. The annual exempt amount is £3,000.
Illustrative. The rebuilt practice sells for £560,400 on shares originally subscribed for £100. The gain is £560,300; after the £3,000 exemption, £557,300 is chargeable. At 18% the bill is £100,314; without the relief, at 24%, it would be £133,752. The relief is worth £33,438 here — and the conditions for it (at least 5% of shares and votes, and being an officer or employee) must have been met for the two years before the disposal, which is why it belongs in the plan and not the deal.
An asset sale is taxed differently and usually worse for the seller: the gain arises inside the company at corporation tax rates of up to 25%, and the proceeds still have to be extracted afterwards. Two layers of tax on the same money, against one.
Run the result through our practice valuation calculator for a working number before anyone quotes you one.
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Multiples vary with size, income mix and who is buying: a small owner-operated practice where the goodwill sits with the departing principal trades well below a large, associate-led practice that a corporate group can bolt onto an existing region. Quoting a range as though it were a fact is how sellers get disappointed and buyers overpay. The more useful point is that the multiple is the smaller of the two numbers you are negotiating. On an adjusted EBITDA of £93,400, half a turn of multiple is worth £46,700; correcting a £72,000 understatement of the principal's clinical cost is worth £432,000 at six times. Argue about the earnings first, and the multiple second.
Predominantly NHS practices are often discussed as a percentage of gross fee income, because the contract makes revenue unusually predictable. Serious buyers and every lender still test the profit underneath it, so treat the percentage as a sanity check rather than the valuation. Three things move the number: the contract value and the UDA rate it implies, the delivery history, and whether the contract transfers cleanly. Delivery history is the one sellers underestimate. A contract met only by working extra sessions, or met in some years and clawed back in others, prices lower than a contract delivered comfortably, because the buyer is buying the recurrence and not the heroics. Our article on the UDA clawback trap covers what a buyer will ask to see.
Add-backs are adjustments to reported profit intended to show what a new owner would really earn: the seller's personal motoring, a spouse's salary for work the buyer will not need, genuinely one-off legal or consultancy fees, and rent set above or below market where the seller owns the freehold. Most are legitimate in principle. The discipline is to make each one prove itself from the accounts and the bank statements, and to insist the earnings carry a realistic market cost for the dentistry the principal personally performs. A one-off cost that appears in three consecutive years is not one-off. An owner's clinical work charged at nil is not profit — it is a job the buyer has to do or pay someone else to do.
On a share sale you are taxed on the capital gain personally. Business Asset Disposal Relief charges 18% on qualifying gains for disposals from 6 April 2026, up from 14% in 2025/26 and 10% before that, and it is capped at £1 million of gains across your lifetime. Gains above that limit, or gains that do not qualify, are taxed at 24%. The annual exempt amount is £3,000 for 2026/27. On shares subscribed for £100 and sold for £560,400, the chargeable gain is £557,300 after the exemption, and the relief takes the bill from £133,752 to £100,314. An asset sale is different and usually worse: the gain arises inside the company at corporation tax rates up to 25%, and you still have to extract the proceeds.
Not usually, and paying for one early is often money spent on the wrong thing. What you need first is the rebuilt earnings figure a buyer will land on, because that is what the price is a multiple of, and it is the number a broker's appraisal is least likely to challenge. Build it yourself two years out: charge a market rate for your own clinical sessions, strip out personal costs, and check that every one-off really was one. A formal valuation earns its fee later — for a partnership dispute, a share transfer, probate, or a lender who wants third-party support. Our practice valuation calculator gives you the working number in a few minutes.
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