The buyer who pays the most for your practice is not always the one who shows up first. Here is how to find the right fit and maximize your outcome.
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The private practice landscape is contracting. As of 2024, only 42.2% of physicians work in private practices, down from 60.1% in 2012. For the first time on record, fewer than half of physicians work in practices with ten or fewer physicians. This is not just a demographic shift. It is a market signal that every practice owner needs to understand before entering a sale process.
The decline creates two realities simultaneously. For physicians still in private practice, the mission to preserve and grow independent care becomes more urgent. And for those considering a sale, understanding who the buyers are and how they evaluate value has never been more important.
The top three reasons physicians cite for selling their practice: administrative burden, rising operational costs, and stagnant reimbursement rates. These are solvable problems. But for physicians who entered medicine to practice medicine, not to run a business, the weight of those problems eventually outpaces the desire to solve them. That is the gap that creates acquisition opportunities and why buyers with operational infrastructure are positioned to do well in this market.
Private equity firms are the most aggressive buyers in today's market. Between 2016 and 2020, PE firms were involved in 73.7% of physician practice acquisitions. The PE model is a freight train: acquire platform practices, add smaller practices as cargo, and eventually resell the combined entity at a higher multiple to a secondary buyer. Nearly 98% of practices that went through a PE exit were resold to another PE firm. Understanding this model helps you know what they are looking for, and what they will pay.
Traditional employment models, joint venture partnerships, and professional service agreements are how health systems are absorbing private practices. For physicians who want to step back from ownership without leaving medicine, this can be a practical path.
Insurance companies, retail health entities, technology companies, and medical device manufacturers are all entering the acquisition market in various healthcare specialties. These buyers are often looking for patient access, data infrastructure, or distribution networks rather than pure financial return.
Practice-to-practice acquisitions remain common. A larger practice acquiring a smaller one in an adjacent geography, or a practice acquiring a competitor to consolidate market share. These buyers move for strategic reasons and often offer a faster, less complex transaction.
Existing partners, key employees, and family members represent a meaningful segment of acquisitions, approximately 23% to 24% in most surveys. Brandon's position: if your team built the practice with you, they deserve a discount. How much of a discount is a strategic decision, but the principle of honoring contribution is both ethical and practical for retention during the transition.
Start with market research. Engage healthcare investment banking advisors who have active relationships with PE firms and health systems. Work with consultants who have a current pulse on transaction activity in your specialty and geography. Ask a business broker to pull a report of acquisitions completed in your market over the last 12 months: who bought, at what structure, and at what price range.
Create competition among buyers. The more interested parties you have in the room, the more leverage you have on both price and terms. A defined buyer profile, developed before you go to market, helps you move faster and negotiate from a position of clarity.
Brandon's approach: agree on the multiplier before finalizing the EBITDA figure. Get the buyer to commit to a range, say six to seven times, before the detailed financial review begins. Then bring in independent audits to establish the agreed-upon EBITDA. It is easier to get third-party validation of a financial figure than to renegotiate a multiplier once both sides have anchored to a number.
And know your walk-away. There is no multiplier low enough that makes a sale worth doing if the buyer is not the right fit. The post-sale transition period affects your team, your patients, and your legacy. Choose accordingly.
Having a broker or advisor who genuinely knows the healthcare acquisition market increases your final sale price by an average of 23% compared to owners who go to market without representation. This is not a cost. It is an investment with a measurable return.
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