The timeline varies depending on factors like market demand, practice size, and preparation. On average:

• • Preparation: 3-6 months to organize financials, improve operations, and hire professionals (e.g., brokers, attorneys).

• • Finding a Buyer: 6-12 months, though it can be faster with a broker or slower in rural areas.

• • Closing the Sale: 1-3 months for due diligence, negotiations, and legal paperwork.

The entire process typically takes 9-18 months, but it can be expedited with proper planning.

Hiring a broker is recommended for most physicians because: (this answer is from web polls, we're not just talking ourselves up!)

• • Expertise: Brokers understand healthcare market trends and valuation.

• • Network: They have access to potential buyers (e.g., other physicians, hospitals, private equity firms).

• • Time Savings: They handle marketing, negotiations, and paperwork.

Selling a practice requires significant time, business acumen, and legal knowledge, which could lead to mistakes or a lower sale price if not done properly.

Buyers and their advisors will want to review key documents, including:

• • Financial statements (profit/loss statements, balance sheets) for the past 3-5 years.

• • Tax returns for the same period.

• • Patient records summary (anonymized, showing volume and retention).

• • List of assets (equipment, furniture, property leases or deeds).

• • Contracts (e.g., insurance, vendor agreements, employment contracts).

• • Licenses and certifications.

• • Accounts receivable and payable reports.

Having these ready and organized can speed up the process and build buyer confidence.

Tax consequences depend on the sale structure:

• • Asset Sale: Selling individual assets (e.g., equipment, goodwill) may result in capital gains tax (long-term rates typically 15-20%) and ordinary income tax on depreciated assets.

• • Stock Sale: Selling ownership (e.g., shares in a corporation) is usually taxed as capital gains, often at a lower rate.

Consulting a tax advisor or CPA familiar with healthcare transactions is critical to minimize tax liability and optimize the sale structure.

Yes, many physicians sell their practice but negotiate to stay on as an employee or contractor. This is common when selling to a hospital or group practice. Terms to negotiate include:

• • Salary or hourly rate.

• • Work schedule (full-time, part-time, or phased retirement).

• • Non-compete clauses (limits on practicing nearby post-employment).

This arrangement allows you to offload administrative burdens while continuing to see patients.

Key legal issues include:

• • Non-Compete Agreements: Buyers may require you to agree not to practice within a certain radius (e.g., 10-25 miles) for a set time (e.g., 1-5 years).

• • HIPAA Compliance: Patient privacy must be maintained during the sale and transition.

• • Contracts: Review leases, loans, or vendor agreements for transferability or penalties.

• • State Regulations: Some states have specific rules about practice sales or ownership (e.g., corporate practice of medicine laws).

Hiring an attorney with healthcare transaction experience is essential.

To get the best price:

• • Boost Profitability: Reduce overhead, optimize billing, and increase patient volume before selling.

• • Maintain Records: Clean, accurate financials and patient data inspire buyer confidence.

• • Upgrade Equipment: Modern tools can increase perceived value.

• • Retain Staff: A stable, trained team is a selling point.

• • Time the Market: Sell when demand for your specialty or location is high.

Working with an advisor, like ACE, can help identify and implement these improvements and time the market correctly.

PE firms are attracted to medical practices for:

• • Revenue Potential: Practices with stable cash flow and growth opportunities (e.g., elective procedures) are lucrative.

• • Consolidation: They aim to acquire multiple practices to create regional or national networks, achieving economies of scale.

• • High Margins: Specialties with ancillary services (e.g., surgery centers, imaging) offer strong profit margins.

• • Exit Strategy: PE firms typically plan to grow the practice and sell it (or the larger entity) within 5-7 years for a profit.

PE firms look for:

• • Size and Revenue: Practices with annual revenues of $5 million+ are often preferred, though smaller practices in a "platform" strategy (to anchor future acquisitions) may also appeal.

• • Profitability: EBITDA (earnings before interest, taxes, depreciation, and amortization) margins of 15-25% or higher are ideal.

• • Growth Potential: Ability to add locations, providers, or services.

• • Specialty: High-demand fields like dermatology, plastic surgery, or gastroenterology are hotspots.

• • Management: A practice with strong administrative systems or a physician willing to stay involved.

ACE can assess your practice’s appeal to PE and MSO buyers.

The process generally follows these steps:

1. 1. Preparation: Organize financials, patient data, and operations (3-6 months).

1. 1. Valuation: Hire a broker or advisor to determine your practice’s worth and pitch it to PE firms.

1. 1. Marketing: The broker identifies PE buyers and solicits offers (3-6 months).

1. 1. Due Diligence: The PE firm reviews your records, operations, and compliance (1-3 months).

1. 1. Negotiation: Agree on price, terms (e.g., your role post-sale), and legal details.

1. 1. Closing: Finalize the sale with legal documentation (1-2 months).

Total timeline: 9-18 months, depending on complexity.

PE firms often use a multiple of EBITDA, typically ranging from:

• • 4-8x EBITDA for smaller or less scalable practices.

• • 8-12x EBITDA or higher for larger, high-growth practices in desirable specialties.

For example, a practice with $1 million in EBITDA might sell for $8-12 million. They also consider market trends, your patient base, and potential for operational improvements. A formal valuation by a healthcare advisor, like ACE Practice Sales, is key to negotiating the best enterprise value.

Often, yes. PE firms frequently require selling physicians to:

• • Stay On: Work for 2-5 years (full- or part-time) to ensure a smooth transition and maintain revenue.

• • Equity Roll-Over: Reinvest a portion of the sale proceeds (e.g., 20-40%) into the new entity, aligning your interests with theirs for future growth.

Your role might "shift" from owner to employee (saving you the time and stress of running the business), with a salary plus incentives. It is wise to think about and negotiate these terms upfront depending on your particular goals.

Post-sale changes may include:

• • Centralized Management: Billing, HR, and marketing may be handled by the PE firm’s management company.

• • Cost-Cutting: Pressure to reduce Overhead or increase efficiency.

• • Growth Push: Expansion of services, locations, or providers to boost revenue.

• • Loss of Control: You’ll have less say in day-to-day decisions, though clinical autonomy is often preserved (to a degree). 

Most physicians report improved work-life balance.

Benefits include:

• • Higher Valuation: PE firms often pay more than individual buyers due to their consolidation strategy.

• • Cash Upfront: You typically receive a lump sum (e.g., 60-80% of the sale price) at closing.

• • Future Upside: If you roll over equity, you could profit again when the PE firm sells the larger entity.

For example, a $10 million sale with 30% equity retained could yield another payout if the firm sells for $50 million later.

Key issues include:

• • Structure: PE deals are often asset sales, triggering capital gains tax (15-20%) on goodwill and ordinary income tax on equipment recapture. Some involve equity rollovers, deferring taxes.

• • Contracts: Review employment agreements, non-competes (e.g., 5-10 years, 25-mile radius), and earn-out clauses.

• • Compliance: Ensure HIPAA, Stark Law, and state regulations are followed during the transition.

• Advisors: Hire a healthcare attorney and tax specialist to navigate complexities and protect your interests.

To maximize appeal and price:

• • Improve EBITDA: Cut costs, optimize billing, and boost revenue (e.g., add cosmetic services).

• • Document Everything: Clean financials, contracts, and compliance records are a must.

• • Build a Team: Retain skilled staff and consider hiring a COO to show operational strength.

• • Scale Up: Add providers or locations if feasible, signaling growth potential.

Start planning 1-2 years in advance for the best outcome.