MEDICAL PRACTICE VALUATION | Part 5 of 5

How Private Equity Values Medical Practices

Private equity (PE) remains a dominant buyer in healthcare mergers and acquisitions.

Understanding how PE firms evaluate practices improves negotiation positioning.

Private Equity Investment Thesis

PE firms look for:

• Platform scalability
• Predictable cash flow
• Recurring patient base
• Expansion opportunities
• Geographic clustering

Platform vs Add-On Strategy

• Platform: Larger practice used as anchor
• Add-On: Smaller practice acquired to expand footprint

Platform practices command premium multiples.

Equity Rollover

Many PE deals include:

• Partial cash payment
• Retained minority equity
• Second liquidity event opportunity

This can significantly increase long-term wealth creation.

What Private Equity Firms Avoid

• Heavy compliance risk
• Single-provider fragility
• Declining reimbursement trends
• Poor documentation

Strategic Advantage of Representation

A specialized medical mergers and acquisitions brokerage firm, like Ace Practice Sales, understands how to:

• Position your practice attractively
• Create competitive tension
• Negotiate equity terms
• Structure favorable earn-outs