Dental Practice Valuation in May 2026: LOI Due Diligence Mistakes That Reduce Your Net Proceeds

Dr. Martin has a strong dental practice for sale, a motivated buyer, and a clean-looking letter of intent. The headline price looks right. The problem is that the dental practice valuation is only as strong as the assumptions behind it, and in May 2026, buyers, lenders, and landlords are scrutinizing those assumptions harder than they were a year ago.

This is where deals are won or lost. A dentist can agree to an attractive number, spend 60 days in due diligence, and then watch the net proceeds shrink because add-backs, lease terms, equipment debt, or working capital expectations were not handled before the LOI was signed.

If you are preparing to sell, buy dental practice opportunities, refinance, or evaluate dental real estate tied to a practice transition, talk with Burnett Facer of the Schilling Team, who specializes in dental real estate, before you lock in terms.

Dental Practice Valuation Starts Before the LOI Is Signed

Most owners think valuation is a multiple. In reality, valuation is a negotiation over risk.

Buyers are not just asking, "What is EBITDA?" They are asking:

• Which owner expenses are truly add-backs?
• How much revenue depends on the selling dentist staying involved?
• Is hygiene production stable or masking softness in doctor production?
• Does the lease support lender approval and future resale?
• Are equipment loans, seller notes, or tax obligations reducing cash flow after closing?

Here is what most dentists do not realize: once the LOI is signed, the buyer often has the leverage. If the seller did not document the financial story up front, every unclear item becomes a reason to retrade price, demand a larger seller note, or delay closing.

For a confidential valuation review before you test the market, connect with the Schilling Team and Burnett Facer.

The Add-Backs That Create the Most Friction

Add-backs can increase value, but only when they are defensible. A buyer may accept personal auto expenses, one-time consulting fees, or excess owner compensation. They may challenge travel, family payroll, discretionary marketing, or expenses that look recurring.

Clean Add-Backs Need Proof

A strong seller package should show the expense, why it is non-recurring or non-operational, and how removing it changes normalized cash flow. If that support is weak, the buyer's lender may ignore the adjustment even if the buyer personally agrees with it.

Hygiene and Associate Production Matter

A practice with durable hygiene revenue and associate-supported production is usually easier to finance than a practice heavily dependent on one owner-doctor. That does not mean owner-driven practices cannot sell well. It means the transition plan has to be priced, documented, and structured clearly.

Dental Real Estate Can Protect or Damage the Deal

Dental real estate is often treated as a separate issue, but it directly affects dental practice valuation. A buyer and lender need occupancy certainty. If the building is owned by the seller, the lease has to support the practice sale. If the space is leased from a third-party landlord, assignment rights, renewal options, rent escalations, exclusivity, and personal guarantees matter.

If this is structured incorrectly, it can cost you hundreds of thousands. A buyer may love the practice and still walk away if the lease term is too short, the landlord will not approve assignment, or rent resets make dental office financing harder to qualify.

Before signing an LOI, have the Schilling Team review the practice and real estate terms together so the deal is not weakened by a preventable lease issue.

Common Mistakes That Reduce Net Proceeds

The biggest mistakes are usually not dramatic. They are quiet details that surface late.

• Accepting a high headline price with weak financing contingencies
• Ignoring working capital expectations until purchase agreement drafting
• Failing to separate practice value from building value
• Letting the buyer define normalized EBITDA without seller-side support
• Waiting too long to review the lease, assignment language, or renewal options
• Assuming all dental office financing programs view add-backs the same way

In May 2026, buyers still want quality dental practices, but they are more disciplined about debt service, lease risk, and post-closing cash flow. Sellers who prepare their numbers and real estate story before going to market have a stronger chance of protecting both price and certainty of close.

Strategic Recommendation for Sellers and Buyers

If you are selling, build the valuation narrative before the buyer writes the LOI. If you are buying, do not rely on the broker package alone. Test the add-backs, lease terms, lender assumptions, equipment debt, and transition plan before you emotionally commit to the deal.

The right structure can make a fair price financeable. The wrong structure can turn a good practice into a difficult closing.

Reach out to the Schilling Team and connect with Burnett Facer at (949) 212-1346 for a confidential consultation and real numbers on your next move.