Independent-practice viability · Formula v3.0.0

When does ownership become worth what it asks of the owner?

Compare four years of owner economics with employment. Cash, benefits, retirement, capital, unpaid management time, realizable equity, sale friction, tax, liquidity, debt, and guarantees stay separate.

Open the workbench Inspect the calculation contract

Use this ifYou are considering a startup, acquisition, or difficult early ownership period and need to compare it with a credible employed-dentist alternative.

DecisionProceed, redesign, delay, renegotiate, or choose employment based on the four-year tradeoff and the assumptions that control it.

Evidence neededActual compensation offers, benefits, owner distributions, capital calls, year-end debt, guarantees, time logs, tax estimates, and an independent transferable-equity bridge.

Work productYear-by-year owner gap, cumulative gap, capital burden, management-time cost, realizable equity, guarantee exposure, crossover test, and a saveable DenQAI project file.

Method, stop-and-verify condition, and required review

Method: Count like-for-like value. Estimate year-end realizable equity from transferable value less debt, sale costs, tax, and a liquidity haircut; count only its annual change.

Stop and verify: Do not count revenue as owner value, assume equity is liquid, hide guarantees, ignore taxes or debt, or use this teaching model as a valuation, tax return, or lender forecast.

Human review: Dentist and household, dental CPA, lender, attorney, benefits advisor, and qualified valuation reviewer.

Last reviewed: July 24, 2026

Four-year comparison

Expose the cost and the illiquidity of becoming the owner.

All defaults are fictional. Clear them before use, then run a slower-ramp case in which transferable value falls, debt remains, and the guarantee is still outstanding.

The saveable project file preserves inputs, model version, outputs, limitations, and review status on your device.

Value of one unpaid owner-management hour$Opportunity cost—not necessarily an administrator wage.Starting realizable owner equity$Use zero for a new startup unless an existing transferable asset is contributed.

Year 1-$256,000annual owner gap

Employment alternative

Year 1 employed after-tax cashYear 1 employer-paid benefitsYear 1 employer retirement contribution

Ownership cash and time

Year 1 owner after-tax cash withdrawalsYear 1 practice-paid owner benefitsYear 1 owner retirement contributionYear 1 owner capital contributedYear 1 unpaid management hours

Year-end realizable equity bridge

Year 1 transferable practice valueYear 1 debt balanceYear 1 estimated sale costsYear 1 estimated tax if realizedYear 1 liquidity/downside haircutYear 1 personal guarantee outstanding

Employment value: $244,000
Owner economic value: -$12,000
Realizable equity: $0
Annual equity change counted: $0
Management-time cost: $65,000
Guarantee still exposed: $980,000

Year 2-$159,500annual owner gap

Employment alternative

Year 2 employed after-tax cashYear 2 employer-paid benefitsYear 2 employer retirement contribution

Ownership cash and time

Year 2 owner after-tax cash withdrawalsYear 2 practice-paid owner benefitsYear 2 owner retirement contributionYear 2 owner capital contributedYear 2 unpaid management hours

Year-end realizable equity bridge

Year 2 transferable practice valueYear 2 debt balanceYear 2 estimated sale costsYear 2 estimated tax if realizedYear 2 liquidity/downside haircutYear 2 personal guarantee outstanding

Employment value: $256,000
Owner economic value: $96,500
Realizable equity: $0
Annual equity change counted: $0
Management-time cost: $52,500
Guarantee still exposed: $900,000

Year 3$155,300annual owner gap

Employment alternative

Year 3 employed after-tax cashYear 3 employer-paid benefitsYear 3 employer retirement contribution

Ownership cash and time

Year 3 owner after-tax cash withdrawalsYear 3 practice-paid owner benefitsYear 3 owner retirement contributionYear 3 owner capital contributedYear 3 unpaid management hours

Year-end realizable equity bridge

Year 3 transferable practice valueYear 3 debt balanceYear 3 estimated sale costsYear 3 estimated tax if realizedYear 3 liquidity/downside haircutYear 3 personal guarantee outstanding

Employment value: $268,000
Owner economic value: $423,300
Realizable equity: $236,300
Annual equity change counted: $236,300
Management-time cost: $40,000
Guarantee still exposed: $820,000

Year 4$173,900annual owner gap

Employment alternative

Year 4 employed after-tax cashYear 4 employer-paid benefitsYear 4 employer retirement contribution

Ownership cash and time

Year 4 owner after-tax cash withdrawalsYear 4 practice-paid owner benefitsYear 4 owner retirement contributionYear 4 owner capital contributedYear 4 unpaid management hours

Year-end realizable equity bridge

Year 4 transferable practice valueYear 4 debt balanceYear 4 estimated sale costsYear 4 estimated tax if realizedYear 4 liquidity/downside haircutYear 4 personal guarantee outstanding

Employment value: $280,000
Owner economic value: $453,900
Realizable equity: $443,700
Annual equity change counted: $207,400
Management-time cost: $32,500
Guarantee still exposed: $730,000

Four-year employment value$1,048,000

Four-year owner economic value$961,700

Cumulative owner gap-$86,300

Ending realizable equity$443,700

Maximum guarantee exposure$980,000

Sustained illustrative crossoverNot by year 4

Controlling formula · v3.0.0owner value = cash + benefits + retirement + change in realizable equity − capital contributions − unpaid management-time cost

Realizable equity = max(transferable value − debt − estimated sale costs − estimated tax, 0) × (1 − liquidity haircut). Only the change from the prior year is counted. The four-year totals are undiscounted nominal-dollar scenarios; use a qualified present-value analysis when timing materially changes the choice. Guarantee exposure remains visible but is not treated as a loss unless a downside case assumes it is called.

Run the adverse case

What happens if ownership takes longer—or ends early?

Reduce owner cash and transferable value, keep debt and guarantees higher, increase sale friction and capital needs, and test whether both the practice and household retain acceptable runway.

Cash

Use cash actually available to the household after required practice reinvestment—not accounting profit or production.

Equity

Start from independently supportable transferable value, then subtract debt, transaction cost, tax, and liquidity risk.

Guarantees

Show outstanding exposure separately. In a liquidation case, model the amount reasonably at risk rather than hiding it.

Time

Track management, recruiting, billing, compliance, and emergency work that would not exist in the employed alternative.