Sell a Medical Practice
How to Sell a Medical Practice. A Step-by-Step Guide for Physician Owners.
Selling a medical practice is one of the largest financial decisions a physician owner will ever make. This is the six-step process we run for practices selling to private equity, health systems, and strategic buyers.
The 6-Step Process to Sell a Medical Practice
- Exit readiness assessment. Baseline where you stand on EBITDA quality, provider retention, payer mix, referral risk, and data room readiness.
- Valuation and value enhancement. Normalize EBITDA, benchmark comparable transactions, and execute a 6 to 18 month plan to lift the multiple.
- Buyer universe and outreach. Map PE platforms, strategic buyers, and health system acquirers; run a competitive process, not a one-off conversation.
- Letter of intent (LOI). Negotiate headline price, rollover equity, working capital peg, indemnities, and exclusivity terms before diligence starts.
- Buyer diligence and quality of earnings. Support the buyer's QoE, financial, legal, and clinical diligence with pre-built data room responses.
- Definitive agreement and close. Working capital true-up, escrow, and post-close transition planning.
Buyer Types and What They Value
Private equity platforms value predictable EBITDA growth, provider retention, and platform scalability. They typically pay the highest headline multiples and include rollover equity.
Strategic buyers (larger physician groups, health systems) value referral integration, geographic fit, and clinical alignment. They may offer cleaner cash exits and tighter operational integration.
Existing partners or key employees can be a viable path when continuity of ownership matters more than maximum price. This usually involves seller financing and a longer transition.
Preparing to Sell
The best time to start preparing to sell is 18 to 24 months before you want to close. That gives you time to lift EBITDA, formalize contracts, diversify referrals, and build the diligence-ready data room that supports the multiple you want. Read our detailed guide on maximizing medical practice valuation before a private equity exit.
FAQ
Frequently Asked Questions
What are the steps to sell a medical practice successfully?
A well-run medical practice sale follows six steps: (1) exit readiness assessment and value enhancement, (2) normalized EBITDA and valuation, (3) buyer universe mapping and outreach, (4) LOI negotiation, (5) buyer due diligence and quality of earnings, and (6) definitive agreement, working capital true-up, and close. Practices that prepare 12 to 24 months in advance consistently close at higher multiples with better terms.
How long does it take to sell a medical practice?
A prepared practice can complete a sale in 6 to 9 months from engagement to close. Practices needing cleanup on financials, provider agreements, or ancillary revenue typically benefit from a 12 to 24 month preparation window before going to market.
Should I sell to a private equity platform or a strategic buyer?
Private equity platforms typically offer higher headline multiples, a rollover equity component, and continued clinical autonomy under new financial and operational structure. Strategic buyers (health systems, larger physician groups) may offer cleaner cash exits, tighter integration, and different post-close roles. The right choice depends on your goals for cash out, continued involvement, provider retention, and long-term structure.
How do I get the highest price when selling my medical practice?
The highest-value sales come from practices that (a) prove growing normalized EBITDA, (b) demonstrate provider retention with fair comp and enforceable non-competes, (c) diversify referral sources, (d) formalize payer contracts and payer mix, (e) run a competitive process with multiple credible bidders, and (f) walk into diligence with a clean, buyer-ready data room.
What are the biggest deal-killers when selling a medical practice?
The most common deal-killers are: unexplained EBITDA swings, provider departures during diligence, related-party leases without arms-length rent, referral concentration, compliance and coding issues surfaced in the QoE, unquantified working capital adjustments, and a data room that cannot support the numbers in the CIM.
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