Demystifying Dental Office Valuation: Insights from Expert Fazel Mostashari

A photo of two dentists

Valuing a dental office is a nuanced and intricate process that requires a deep understanding of both the dental industry and the principles of business valuation. Fazel Mostashari, a seasoned expert in the field, brings a wealth of knowledge and experience to the table when it comes to evaluating the worth of dental practices. In this comprehensive article, we’ll delve into the art and science of dental office valuation, drawing on insights and expertise shared by Fazel Mostashari owner of Dental CPA. Whether you’re a dental professional looking to sell your practice, a potential buyer, or simply curious about the valuation process, this article will provide you with valuable insights into this complex topic.

The Foundation of Dental Office Valuation

Dental office valuation is not a one-size-fits-all process; it requires a tailored approach that takes into account the unique characteristics of each practice. According to Fazel, the foundation of dental office valuation lies in understanding the key factors that influence the practice’s worth:

  • Financial Performance: The financial health of a dental practice is a primary consideration in valuation. Factors such as revenue, profit margins, and cash flow provide insights into the practice’s earning potential and financial stability.
  • Patient Base: The size and demographics of the patient base play a significant role in valuation. A loyal and diverse patient base can enhance the practice’s value, as it represents a stable source of revenue.
  • Location: The practice’s geographical location affects its market potential and patient demand. Urban or suburban practices may command higher valuations due to increased population density and accessibility.
  • Equipment and Technology: Modern and well-maintained equipment, along with advanced dental technology, can contribute to a higher valuation by enhancing the practice’s operational efficiency and quality of care.
  • Goodwill and Reputation: A dental practice’s reputation within the community and the dental industry carries substantial weight. A positive reputation and strong relationships with patients can positively impact valuation.
  • Staff and Human Capital: The skill and expertise of the dental team, along with their tenure, can influence valuation. A skilled and dedicated team contributes to the practice’s overall success.
  • Methods of Dental Office Valuation

Fazel highlights that there are various methods employed to determine the value of a dental office, each with its own advantages and considerations:

  • Income-Based Valuation: This approach calculates the practice’s value based on its future income potential. Revenue, cash flow, and profit projections are analyzed to estimate the practice’s earning capacity.
  • Market Comparison Approach: Comparable sales in the market are used to benchmark the practice’s value. Similar dental practices that have been sold recently serve as reference points for determining value.
  • Asset-Based Valuation: The value of the practice’s tangible assets, including equipment, real estate, and inventory, is assessed. This approach is particularly useful when evaluating a practice with valuable assets.
  • Discounted Cash Flow (DCF) Analysis: DCF analysis estimates the present value of future cash flows the practice is expected to generate. It considers factors like growth rates, discount rates, and risk factors.
  • Hybrid Approaches: Often, a combination of methods is used to arrive at a comprehensive valuation. Fazel Mostashari highlights that the choice of method depends on the practice’s unique characteristics and the goals of the valuation.
  • Navigating the Valuation Process

Fazel underscores the importance of engaging with a qualified and experienced valuation expert when assessing the value of a dental practice. Here are essential steps to navigate the valuation process:

  • Gather Comprehensive Financial Data: Accurate financial statements, tax records, and operational data are crucial for an in-depth analysis. A valuation expert will scrutinize these documents to gain insights into the practice’s financial performance.
  • Assess Non-Financial Factors: Beyond financial data, non-financial factors such as patient demographics, lease agreements, and industry trends are considered to provide a holistic view of the practice’s value.
  • Apply Appropriate Valuation Methods: Depending on the practice’s attributes and goals, the valuation expert will choose the most relevant valuation methods and apply them rigorously.
  • Consider Market Conditions: The state of the dental industry and the local market can impact valuation. An expert like Fazel Mostashari takes current market conditions into account when assessing a practice’s value.
  • Review and Interpret Results: Once the valuation is complete, the expert will review the results with the practice owner or potential buyer. Clear communication ensures a comprehensive understanding of the valuation findings.
  • Factors Influencing the Sale of a Dental Practice

Fazel emphasizes that the valuation of a dental practice is closely intertwined with its eventual sale. Understanding the factors that influence the sale process is essential for both sellers and buyers:

  • Seller’s Motivation: The reason behind the sale can impact negotiations and the practice’s value. Retirement, relocation, or partnership dissolution are some common motivations.
  • Market Demand: The demand for dental practices in a given area can influence the selling price. Practices located in high-demand areas may command a higher value.
  • Buyer’s Perspective: Buyers assess the potential for growth and profitability when considering a practice. A well-organized and profitable practice is more likely to attract buyers and secure a favorable sale price.
  • Transition Support: The seller’s willingness to provide transition support, such as training and mentorship, can positively impact the practice’s value. Buyers value a smooth transition process.
  • Legal and Regulatory Factors: Compliance with legal and regulatory requirements is essential. A well-structured practice with proper documentation enhances its value and marketability.


Valuing a dental office is a complex undertaking that requires a deep understanding of financial, operational, and industry-specific factors. Fazel Mostashari’s expertise and insights offer valuable guidance for dental professionals navigating the intricate landscape of dental office valuation. By considering financial performance, patient base, location, equipment, goodwill, and other key factors, dental professionals can make informed decisions when buying or selling a practice.

Engaging with a seasoned valuation expert like Fazel ensures a comprehensive and accurate assessment of a dental practice’s worth. Whether you’re a seller looking to maximize the value of your practice or a buyer seeking a sound investment, the insights shared by Fazel Mostashari shed light on the art and science of dental office valuation, helping you make informed decisions and secure a successful transition in the dynamic world of dentistry.

Contact Fazel at Dental CPA and get started today.

About Our Experts

Fazel Mostashari is a dental practice expert whose specialty is financial accounting, tax planning, and practice purchase and set up for the dental industry. For over 10 years, Fazel has been the driving force behind the success of many dental practices.

As a proud husband to a dentist, he understands the unique challenges of running a dental practice. Together, they run a thriving, multi-specialty practice in the sunny city of Woodland Hills, CA.

If you’re looking for expert advice, set up a consultation with Fazel.
Fazel Mostashari: Dental Practice Financial Expert

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