Do you know what your practice really earns each year?
By Bob Septak, MBA
UPBA President & Broker
I don’t mean your total collections or production—those are easy reports to run in your management software. I mean the true profit (cash flow) of your practice.
Here is the reality: you won’t find that number on your tax return.
Your accountant’s primary job is to legally minimize your income taxes. Because of that, the net income reported on your tax return rarely reflects your practice’s real bottom line. Furthermore, standard tax preparation doesn’t produce the specialized financial reports required to reveal true practice earnings.
In a typical specialty practice, numerous discretionary, personal, or non-recurring expenses run through the business. For example:
- Family Payroll: Family members may be paid through the practice and over- or under-compensated compared to fair market value.
- Real Estate Rent: Owners who hold the practice real estate in a separate entity often overcharge, undercharge, or charge no rent at all.
- One-Time & Discretionary Expenses: Continuing education trips, personal vehicles, non-recurring legal fees, or non-essential perks reduce reported taxable income.
Depending on your entity structure and doctor compensation model, your tax return profit may or may not include what you paid yourself or an associate.
Why This Matters for Your Exit
When it comes time to transition or sell your practice, true cash flow is the single most critical factor in your valuation.
Contrary to popular belief, prospective buyers, dental lenders, and private equity platforms do not value your practice based on revenue or collections. They value it on Adjusted EBITDA / Normalized Cash Flow. If your financials aren’t recast properly, you leave significant equity on the table.
Unlocking Your True Practice Value
At United Periodontal Brokers of America (UPBA), we have years of specialized experience identifying and normalizing practice add-backs. When we bring a periodontal practice to market, we recast your financial statements to showcase the absolute maximum bottom line possible to prospective buyers and lenders.
If you are considering selling your practice or nearing that point, please give us a call for a confidential conversation to see how we may help.
Robert Septak, MBA
President | United Periodontal Brokers of America
Pennsylvania Office: 412-931-1040
Florida Office: 239-776-7462
E: bob@unitedperiobrokers.com
Exclusively Serving Periodontal Practice Transitions Nationwide