What is EBITDA and why is it important to dentists?

You may have been referred to ‘EBITDA’ or to give it its full name ‘Earnings Before Interest Taxation Depreciation and Amortisation’.

A bit of a mouthful, but the point to note is it is an adjusted net profit figure that dental business valuers use to assess the value of the goodwill element of your dental business.

Your practice goodwill is the non tangible element of your practice. It includes everything bar your physical fixtures and fittings which are valued separately. So your goodwill includes how well you retain and grow your patient base and your reputation in the local community.

To value your goodwill, valuers extract certain elements from your net profit figure such as the interest you pay on the loans you have and any depreciation applied to your long term assets. This is because these factors are specific to you and do not necessarily apply to an incoming business owner.

A multiple of this adjusted net profit figure, or EBITDA, is then used to value your business. At the moment we are seeing dental businesses change hands for 3.5 times to 6 times EBITDA.

You may not wish to sell your dental business in the short or even medium term. But a proactive accountant will calculate your EBITDA for you on a regular basis and support you in improving it over time, in order to improve the value of your business when you do come to sell.

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Original Article: What is EBITDA and why is it important to dentists?
Clear Vision

About Clear Vision

The traditional method of setting goals and gauging the success of a dental business does not automatically provide you with what you need and want. As the dental business owner, it puts you last in the queue. Clear Vision believes that your business should deliver the lifestyle you want. So when you work with our friendly and vibrant team of accountants and business advisers, it starts with you. What you want. How you want to create a difference in your life. Tell us your goals and we’ll work to help you develop a strong, positive dental business which delivers the life you want for you and your family. We have worked with dentists all over the UK since 2001. Dentists who share the same challenges and issues as you. And we’ve seen what factors will really make the difference in improving your results and increasing your rewards. So you benefit from what we know works and doesn’t work. For a taste of the insights we share check out our blog for dentists: www.clearvisiondentalblog.co.uk. We’re ready to share our experience and insights with you. Simply call our friendly team on 01249 712074 for an informal discussion. You’ll have our ear, our understanding and the considerable expertise which comes from successfully improving the lives of dentists like you.