Why Practice Valuations Differ from State to State
Understanding the Factors Behind Market Multiples
Author: Darren Sardoff, President and Chief Investment Officer
The Issue
One of the most common questions we hear from our dental clients is: “Why are dentists in [State A] getting a higher multiple than those in [State B]?”
For example, it’s not uncommon for dentists in Florida to receive significantly higher valuations than their peers in California — even when their practices are producing similar revenue or EBITDA. This can be frustrating and confusing without the right context, especially for high- performing doctors in markets where multiples seem to be lagging.
Here’s a breakdown of the key reasons why valuation multiples vary geographically and what it means for your exit strategy:
1. DSO Buyer Appetite Varies by Region
Not all DSOs are active in every market. In fact, many have defined regional strategies — focusing their acquisition activity in a few core states where they already have infrastructure, leadership, and growth targets.
If a DSO is aggressively building in Florida, for example, they may be willing to pay a premium to secure anchor practices in that region. In contrast, they may apply conservative multiples in California, where operational costs are higher and regulatory hurdles are more complex.
2. Cost of Doing Business Impacts Valuation
States like California come with high labor costs, employee protections, insurance burdens, and more stringent regulatory environments. These add friction and cost to practice operations, which can compress EBITDA margins and lowers the price DSOs are willing to pay.
In contrast, Florida has no state income tax, more favorable employment laws, and a business-friendly climate. All of these factors improve margin potential — and ultimately valuation — from the buyer’s perspective.
3. Supply and Demand of Practices
In some markets, especially mature ones like California, the supply of practices for sale is much higher — giving DSOs more options and more negotiating leverage. In other markets where inventory is tight or where DSOs are still building their footprint, buyers may have to compete more aggressively, driving multiples upward.
4. Demographics and Growth Trends
DSOs are looking at long-term market potential. Areas with strong population growth, favorable payer mixes, and positive demographic trends (like parts of Texas, Arizona, and Florida) are often more attractive to buyers than saturated or shrinking markets.
5. Reimbursement and Insurance Climate
States differ in how insurance, Medicaid, and PPO plans reimburse providers and DSOs analyze these economics carefully. Markets with stronger reimbursement environments are simply more profitable, and practices in those areas tend to command higher multiples.
So What Does This Mean for You?
If you're seeing practices in another state sell for more than yours, it's not necessarily a reflection of your clinical skill, size, or financial performance — but rather a function of regional market dynamics.
However, there are strategic ways to increase your value, even in more conservative markets:
• Position yourself as a strategic anchor practice in a region the DSO is trying to enter
• Optimize your margins and operating efficiency
• Explore joint venture models that allow partial sale now with upside later
• Work with an advisor who has access to multiple buyers across multiple states
At KRG, we specialize in helping dentists across the country navigate these variables and identify the right buyer, at the right time, on the right terms. If you’re curious about what your practice could command in today’s market — or how your location may impact valuation — we’d be happy to give you a confidential assessment.
About King’s Ransom Group
King’s Ransom Group (“KRG”) is a private investment firm and M&A advisor, working with companies across the business services, healthcare, and marketing industries. KRG’s healthcare group advises dental practices nationwide in all facets of their sales process to help practices find the best and right investors and partners. KRG’s team has decades of experience founding and operating businesses across various sectors as well as financial expertise, having worked at some of the largest firms on Wall Street. For more information, please visit: www.kingsransomgroup.com.
About DentyVal
Thinking of selling your practice, or perhaps you've already received an offer? DentyVal’s innovative technology gives you a confidential and unbiased estimate of its value within minutes. Developed by the dental industry's most trusted financial experts, DentyVal gives you the confidence that you're getting the highest value for your practice.
DentyVal is 100% confidential, and the information you provide is solely used for generating your valuation. You'll also have the opportunity to have a no-obligation conversation with one of our dental market experts to discuss your valuation and/or learn how we can help you get the best sale deal possible.
Whether you're interested in selling now or in the future, it's not too early to be well-informed! Try DentyVal now!
