How to Sell Your Medical Practice
M&A guidance for physicians considering a practice sale. Navigate hospital affiliations, private equity interest, and maximize your exit outcome.
The Medical Practice Market for Sellers
Medical practices are actively sought by hospitals, health systems, private equity-backed management companies, and physician groups seeking to expand. The buyer landscape has evolved significantly, with financial buyers (PE) now competing alongside traditional hospital acquirers.
Practice value depends heavily on specialty, payer mix, ancillary services, and the degree of physician dependency. Primary care practices tend to attract hospital buyers focused on referral capture, while specialty practices may command premium valuations from PE platforms building specialty-specific networks.
The regulatory and reimbursement environment adds complexity to medical practice transactions. Buyers will scrutinize compliance history, billing practices, and payer contracts closely during due diligence.
Current State of Medical Practice M&A
What's driving buyer activity and valuations in the Medical Practice sector right now.
Private Equity Expanding in Healthcare
PE firms are actively acquiring specialty practices — dermatology, gastroenterology, orthopedics, pain management, and others — to build management platforms. These buyers often pay premium multiples.
Hospital Employment Still Active
Health systems continue acquiring primary care and specialty practices to capture referrals and expand their networks. Hospital buyers typically offer employment arrangements with salary guarantees.
Value-Based Care Impacting Valuations
Practices positioned for value-based reimbursement — with quality metrics, care management programs, and data capabilities — are increasingly attractive to sophisticated buyers.
Physician Shortage Driving Demand
The nationwide physician shortage means established practices with active patient bases and trained staff are highly desirable, regardless of specialty.
What Buyers Look for in a Medical Practice Business
Understanding these value drivers can help you prepare your business and command a higher multiple.
Active Patient Base
A stable, growing panel of active patients (seen within 12–18 months) who return regularly is the foundation of practice value.
Payer Mix
A balanced mix of commercial insurance, Medicare, and self-pay is preferred. Heavy Medicaid concentration or a single payer dominant can reduce valuations.
Ancillary Revenue
In-house lab, imaging, procedures, or dispensing add value through additional revenue streams and patient convenience.
Staff & Provider Depth
Mid-level providers (NPs, PAs) and experienced support staff who will stay post-sale reduce buyer risk and increase value.
EMR & Technology
A modern EMR system (Epic, Athena, etc.) with clean data and integrated billing is expected. Legacy systems or paper charts are concerns.
Compliance & Billing
Clean compliance history, proper credentialing, and defensible billing practices are essential. Any prior audits or issues will be scrutinized heavily.
How Medical Practice Businesses Are Valued
A clear explanation of how multiples work and what drives your number.
The SDE Method
Most Medical Practice businesses under $5M in revenue are valued using Seller's Discretionary Earnings (SDE). SDE represents the total financial benefit to a single working owner — essentially, net profit plus owner salary, personal expenses run through the business, depreciation, and one-time costs.
Once SDE is calculated, it's multiplied by an industry-specific multiple (typically 1.5 to 3 for Medical Practice) to arrive at an estimated business value. The specific multiple depends on revenue size, growth trajectory, customer concentration, and the value drivers listed above.
What About EBITDA?
There is also the EBITDA method — Earnings Before Interest, Taxes, Depreciation, and Amortization. Unlike SDE, EBITDA does not add back the owner's salary and is typically used for larger businesses ($5M+ revenue) with absentee ownership or multiple locations. We're showing SDE here because it applies to the majority of owner-operated Medical Practice businesses.
Example Valuation
Who Buys Medical Practice Businesses?
Different buyer types bring different deal structures, timelines, and pricing.
Private Equity
PE firms acquiring Medical Practice companies as platform or add-on investments. They typically pay the highest multiples, especially for businesses with $500K+ SDE.
Strategic Acquirers
Larger Medical Practice companies expanding geographically or adding capabilities. They value your customer base, team, and territorial presence.
Individual Buyers
Qualified individuals using SBA financing to acquire their first or next business. They want a stable, profitable operation they can manage.
How Selling Your Medical Practice Business Works
A proven five-step process designed to protect your confidentiality and maximize your outcome.
Confidential Valuation
We assess your financials, contracts, equipment, and market position to determine a realistic value range.
Preparation & Packaging
We prepare a Confidential Business Review (CBR) — a professional document that presents your business to qualified buyers.
Confidential Marketing
Your business is marketed to our buyer network. Every buyer signs an NDA before receiving any identifying information.
Negotiation & Due Diligence
We manage incoming offers, negotiate terms on your behalf, and guide you through buyer due diligence.
Closing & Transition
We coordinate with all parties to close the deal and support the ownership transition.
Common Challenges When Selling a Medical Practice Business
Being aware of these issues early lets you address them before they cost you money at closing.
Physician Dependency
If the practice can't see patients without you, continuity is the key question. Adding associate physicians or mid-levels before selling significantly increases transferability.
Payer Contract Transition
Insurance contracts are often tied to specific providers. Buyers need to understand which contracts transfer and what credentialing will be required post-close.
Regulatory Compliance
Healthcare transactions trigger compliance scrutiny — Stark Law, Anti-Kickback, HIPAA, and billing practices. Clean compliance history is essential; any past issues must be disclosed.
Real Estate Complexity
Medical practices often own or have complex lease arrangements for their facilities. Structuring the real estate component — sell, lease, or sale-leaseback — adds transaction complexity.
Medical Practice Business Sale FAQs
How much is my medical practice worth?
Medical practices typically sell for 1.5× to 3.0× SDE, or 40–70% of annual collections depending on specialty, payer mix, and practice characteristics. Specialty practices with ancillary revenue tend toward the higher end.
What's the difference between selling to a hospital vs. private equity?
Hospitals typically offer employment arrangements with salary guarantees and may value referral capture over practice profitability. PE buyers focus on earnings and growth potential, often offering equity rollover and higher upfront valuations.
How long does it take to sell a medical practice?
Medical practice sales typically take 8–14 months due to regulatory complexity, credentialing, and due diligence requirements. Well-prepared practices with clean compliance records close faster.
Will I have to stay after selling?
Most buyers require a transition period of 1–3 years, especially for hospital or PE transactions. Terms vary — some physicians become employees, others consultants. This is heavily negotiated.
What happens to my staff?
In most cases, staff are retained. Buyers value trained teams with established patient relationships. Employment terms may change depending on the buyer's HR practices.
How do I prepare my medical practice for sale?
Start 2–3 years out. Clean up compliance, update billing practices, document procedures, reduce physician dependency, and optimize financials. Have your EMR data organized and exportable.
Are medical practice sales subject to special regulations?
Yes. Healthcare transactions must comply with Stark Law, Anti-Kickback Statute, and state-specific regulations. Fair market value opinions and proper structuring are often required.
Why Work With John Salony
Experienced M&A advisor serving business owners across the Southeast.
"John made the entire process feel manageable. He understood our industry, found the right buyer, and negotiated terms that exceeded what I thought was possible."
Ready to Explore Selling Your Medical Practice Business?
Schedule a confidential, no-obligation conversation. We'll discuss your goals, timeline, and what your business could be worth in today's market.
