# What is the difference between SDE and EBITDA when selling a dental practice? SDE (seller’s discretionary earnings) adds the owner’s full pay back to profit and suits a dentist buyer, while adjusted EBITDA replaces the owner’s clinical pay with a market cost and suits DSOs. Closed dental sales ran 1.60x to 3.37x SDE from 2021 to 2025 (Palmstone Capital citing BizBuySell), against 5x to 9x+ EBITDA in TUSK’s 2026 range ([deal sourcing](https://ddsintel.com/deal-sourcing)). By DDSIntel Editorial Team. Source: DDSIntel, https://ddsintel.com/deal-sourcing/sde-vs-ebitda. Published 2026-10-28; data as of 2026-10-25. ## Key numbers - **1.6** x SDE, the 25th percentile of closed dental sales, 2021 to 2025 (Palmstone Capital, citing BizBuySell, 2021-2025; https://www.palmstone-capital.com/valuation/dental-practice-valuation) - **3.37** x SDE, the 75th percentile of those sales (Palmstone Capital, citing BizBuySell, 2021-2025; https://www.palmstone-capital.com/valuation/dental-practice-valuation) - **5** x EBITDA, the low end of TUSK Practice Sales’ 2026 range (TUSK Practice Sales, Q3 2026 Dental Market Report (PR Newswire), Q3 2026; https://www.prnewswire.com/news-releases/tusk-practice-sales-assesses-the-state-of-the-dental-industry-in-its-q3-2026-dental-market-report-302823046.html) - **9** x EBITDA, the high end of that range (9x+) (TUSK Practice Sales, Q3 2026 Dental Market Report (PR Newswire), Q3 2026; https://www.prnewswire.com/news-releases/tusk-practice-sales-assesses-the-state-of-the-dental-industry-in-its-q3-2026-dental-market-report-302823046.html) - **30%** percent of the owner’s production, the low end of a common clinical replacement assumption (Palmstone Capital, 2026; https://www.palmstone-capital.com/valuation/dental-practice-valuation) ## What is SDE in a dental practice? SDE is the total benefit available to one owner who also works in the practice. Palmstone Capital defines it as pretax profit plus one working owner’s compensation and benefits, interest, depreciation, amortization and documented non-recurring or discretionary expenses. It assumes the buyer, not a hired associate, will do the dentistry. McLerran & Associates says SDE is typically used for practices with collections under $1.5 million, mostly in doctor-to-doctor sales, and puts private-buyer multiples at 1.75x to 2.25x SDE in 2026. That is one firm’s range, not a national measure. ## What is adjusted EBITDA in a dental practice? Adjusted EBITDA is operating profit after paying market rates for everything, including the dentist. Palmstone Capital describes replacing the owner’s clinical labor with roughly 30% to 35% of that owner’s production, plus normalizing rent to market. DSOs use this lens because they buy a business and employ dentists to staff it. The [adjusted EBITDA](https://ddsintel.com/glossary/adjusted-ebitda) and [EBITDA multiple](https://ddsintel.com/glossary/ebitda-multiple) definitions, and how CPAs normalize earnings, are in [normalizing dental EBITDA](https://ddsintel.com/for/normalizing-dental-ebitda). ## Why do the two metrics carry different multiples? The gap is roughly the cost of replacing the owner as a clinician. SDE is the larger base because it includes the owner’s labor, so it carries lower multiples. EBITDA is smaller and transferable, so it carries higher ones. The two multiples are not interchangeable and should never be applied to the other base. Applying a DSO EBITDA multiple to SDE overstates value, because it treats the owner’s own work as pure profit. Published ranges sit side by side on [practice valuation multiples](https://ddsintel.com/data/practice-valuation-multiples). ## Which metric will my buyers use? It depends on who is bidding. Individual dentist buyers usually price on SDE or a share of collections, while DSOs and private equity buyers price on adjusted EBITDA. If both kinds of buyer may bid, prepare both numbers from the same normalized financials and ask every buyer which base they are pricing on. Compare paths in [DSO or private buyer](https://ddsintel.com/dso/dso-or-private-buyer). How the earnings base later moves the final price is covered in the [working capital peg](https://ddsintel.com/deal-sourcing/working-capital-peg) and [re-trade](https://ddsintel.com/deal-sourcing/dental-practice-retrade) guides. ## How should sellers prepare their numbers? Start with three years of clean, normalized financials. Document every add-back with invoices or payroll records, separate personal expenses, record the owner’s production so a buyer can model replacement cost, and set rent at market if you own the building. A buyer’s quality of earnings review will test each line. The [quality of earnings review](https://ddsintel.com/deal-sourcing/quality-of-earnings-review) guide lists what buyers request. Public-record [transition signals](https://ddsintel.com/signals) show some sale preparation steps in aggregate. ## Frequently asked questions ### Is SDE higher than EBITDA? Usually yes, because SDE adds back the owner’s full compensation while EBITDA deducts a market cost for the owner’s clinical work. ### Do DSOs ever use SDE? Rarely. DSOs generally price on adjusted EBITDA because they will employ dentists after closing. ### What SDE multiple do dental practices sell for? Closed-sale data cited by Palmstone Capital shows an interquartile range of 1.60x to 3.37x SDE for 2021 to 2025. ### How is the owner’s clinical pay replaced in EBITDA? A common approach uses about 30% to 35% of the owner’s production, adjusted for specialty and local associate pay. ### Can DDSIntel calculate my SDE or EBITDA? No. DDSIntel publishes aggregate education and [dental market data](https://ddsintel.com/data) only; work with a dental CPA or valuator. ## Sources 1. Palmstone Capital. Dental practice valuation. https://www.palmstone-capital.com/valuation/dental-practice-valuation 2. McLerran & Associates (Dental Transitions). Dental practice valuation methods (Sept. 18, 2026). https://dentaltransitions.com/articles/dental-practice-valuation-methods/ 3. TUSK Practice Sales. TUSK Practice Sales Assesses the State of the Dental Industry in Its Q3 2026 Dental Market Report (July 10, 2026). https://pr.timesenterprise.com/article/TUSK-Practice-Sales-Assesses-the-State-of-the-Dental-Industry-in-Its-Q3-2026-Dental-Market-Report/6a514c9516e7610b3c53e15d --- DDSIntel is a dental transition intelligence platform that detects pre-market dental practice transition signals for brokers, DSOs, lenders and the firms that serve them.