The Retirement Math That Should Stop You From Selling Too Early

You've spent twenty years building your practice, and a buyer slides an offer across the table with a lot of zeros on it. It feels like the finish line. For many owners, it's actually a pay cut they'll live with for the rest of their lives.

On a recent episode of the Private Practice Survival Guide podcast, Brandon Seigel sat down with Eric Miller of Econologics, a financial firm that works with healthcare practice owners. Miller's warning was simple: most owners sell their practices too early, and the math usually proves it.

Run the Numbers Before You Sign

Miller walks owners through a scenario like this. You're used to taking home $300,000 a year from your practice, and you get an offer of $3 million.

After taxes and deal costs, you might walk away with about $2 million. At a 6% withdrawal rate, that produces roughly $120,000 a year.

You just traded $300,000 in annual income for $120,000. As Miller put it, those zeros can be hypnotic, but your practice is almost always worth more to you by keeping it than by selling it.

Two Numbers Every Owner Should Know

Instead of chasing a vague retirement age, Miller works with two targets.

Your reliable income is what your household needs to cover basic lifestyle expenses. If that's $15,000 a month, or $180,000 a year, you'd need roughly $3.6 million in income-producing assets using his 20x rule of thumb.

Your desired income is what you'd want to truly live well. If that's $40,000 a month, or $480,000 a year, the asset target is closer to $9.6 million.

Those figures count everything: your practice's value, real estate, investments, and other income sources. The point isn't the asset total. It's knowing exactly how much income your household needs to run independently of your practice.

Secure the reliable number first. Then build toward the desired one.

Most Owners Underestimate What They Need

Very few practice owners walk into a planning meeting with a clear picture of what they have, what they need, and what they want. Most are working from estimates that are too low.

Taxes, longevity, inflation, and the rising costs that come with getting older all get left out. Miller's advice is to overestimate on purpose, because that creates necessity, and practice owners have something most employees don't: direct control over the outcome.

Brandon added a sobering observation. Many people in the 55 to 65 range don't have the asset base to stop working, and very few 45-year-olds he knows are on track either.

Read the Deal Structure, Not the Headline

When a corporate buyer makes an offer, the big number at the bottom is rarely what you'll actually receive.

Brandon broke down a typical structure. A $5 million acquisition might allow $3 million in cash at close, $1 million rolled into equity in the acquiring company, and $1 million tied to an earnout based on hitting projections.

That's not a $5 million sale. It's a $3 million sale, and possibly a $2 million one if you miss the earnout.

Miller's guidance on each piece is direct:

• Don't rely on rolled equity. Treat any "second bite of the apple" as a bonus if it ever arrives. In his experience, it rarely pays off the way buyers project.
• Push back on earnouts. Few sellers hit their earnout targets, and earnouts are negotiable. If a buyer wants your practice badly enough, you don't have to accept one.
• Know your cash-at-close number. Make sure the guaranteed portion alone supports the life you want.

Treat Your Practice Like an Investment Now

When Miller asks owners who've already sold what they wish they'd done differently, the same answers come up.

They wish they'd taken more money out of the practice over the years to build retirement accounts and reserves. They wish they'd focused on margin, because a higher-margin practice sells for more.

That work starts long before any offer arrives. Clear financial reporting shows you where profit is actually coming from, and a tight medical billing process protects the collections that drive your valuation.

Retirement Isn't the Goal. Options Are.

Miller doesn't anchor anyone to age 65. His target is a condition: a household that can run autonomously from your practice within seven to ten years, so whatever you do next is a choice and not a necessity.

Purpose matters as much as money. Miller has watched owners sell with nothing lined up and end up miserable within a few years, while others take a strong offer and start something new within weeks because they know what drives them. Brandon put it this way: the goal is enough stability that your focus goes to the work you love, not the work you need, an idea that echoes a lot of current thinking on work, purpose, and burnout.

He also shared a story from his own family. Years ago, they had an attractive offer on his mother-in-law's company that would have required him to sign a 10-year non-compete across all of healthcare. They walked away, and within eight years the company had earned them more than the sale would have.

Decide the Life Before You Decide the Sale

Know your reliable and desired income numbers. Read every deal for what you'll actually receive, not the headline. And decide what your life looks like after the practice before you decide whether to sell it.

Talk with a qualified financial advisor before you sign anything. If you want support building a practice with the margins and clarity that give you real options, our group coaching program is a strong place to start.

Call 877-561-9967 to book a Discovery Call. Let's see if we're the right fit.