Understanding Practice Valuations: What Your Business Is Worth
The key metrics that determine your practice's enterprise value and how to improve them.
Whether you're planning to sell, seeking investment, or just want to understand your asset, knowing your practice's true value is essential. This guide breaks down the valuation methodologies and the levers that impact your number.
How Practices Are Valued
Most healthcare practices are valued as a multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). The multiple depends on several factors.
- •Revenue size and growth rate
- •Profit margins (EBITDA %)
- •Recurring revenue percentage
- •Owner dependency
- •Market position
- •Growth potential
Typical Multiples by Practice Type
MedSpas typically trade at 4-8x EBITDA. Dental practices at 5-10x. Hormone clinics at 4-7x. These ranges vary significantly based on the factors above.
How to Increase Your Multiple
The difference between a 4x and an 8x multiple could be millions of dollars. Here are the key improvements that drive higher valuations.
When we started, we thought our practice was worth $2M. After implementing Voltage Capital's systems and improving our metrics, we sold for $4.8M. — Former Client, Dental Practice
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