Dental Practice Acquisition ROI Calculator
Before you sign a letter of intent on a $750K practice, run the numbers. This calculator models your real net income as an owner — after loan payments — and compares it to what you'd earn staying as an associate. It also computes your debt service coverage ratio (DSCR), the number lenders use to decide if you can afford the loan.
How to read the DSCR
The debt service coverage ratio is the single number SBA lenders care about most. It's simple:
DSCR = Net Operating Income ÷ Annual Debt Service
Net operating income is what the practice makes before your loan payments (collections × (1 − overhead rate)). Annual debt service is 12 × your monthly loan payment.
- ≥ 1.25 — most lenders approve at standard rates. The practice generates 25% more cash than needed to cover debt.
- 1.0 – 1.25 — borderline. Some lenders will fund with additional collateral or a larger down payment. Tight if collections dip.
- < 1.0 — the practice doesn't cash-flow at this price and loan structure. Either the price is too high, the overhead is too high, or you need a longer term/lower rate.
What these numbers don't capture
This calculator gives you directional numbers. A few things that matter but that a simple model can't account for:
- Practice sale value at retirement. A well-run practice may sell for 5–7× EBITDA in 20 years. That exit value is effectively part of your "income" as an owner — and it's completely absent from an associate's financial picture. Your practice may be your single largest retirement asset.
- Owner's compensation adjustment. The collections overhead you entered should reflect what the seller was paying themselves as a salary. If the seller was drawing $350K as owner compensation and you model 60% overhead, you'll overstate your net income if you need to hire an associate to replace that production.
- Tax structure. An S-corp or PLLC practice owner can split earnings between salary and distributions, reducing FICA taxes — savings that don't exist on a W-2 associate salary. A practice owner netting $400K often pays $15K–$25K less in self-employment taxes than a naïve comparison suggests.
- Equipment and CapEx. A 15-year-old practice may need $150K in equipment within years 2–4. Model this separately.
- SBA 7(a) specifics. The guarantee fee (0.5–3.75% of the guaranteed portion) and origination fees add to your real cost of capital. Shop multiple dental-focused lenders — rates and terms vary more than you'd expect.
A worked example: the $750K suburban practice
- Monthly payment: ~$9,121 → annual debt service: ~$109,452.
- Net operating income: $900K × 40% = $360K.
- DSCR: $360K ÷ $109K = 3.3 — very comfortable.
- Year 1 owner net income: $360K − $109K = $251K.
- If she was earning $180K as an associate: +$71K in year 1.
- By year 5 (at 3% annual collection growth), cumulative owner advantage exceeds $400K.
Related reading
Get expert eyes on your specific deal
A calculator tells you the direction. A fee-only financial advisor who works with dentists can review the actual P&L, stress-test the DSCR at lower collections, model the tax structure, and tell you whether the asking price is reasonable for this market. No sales pitch — fee-only.