The Physician's Guide to Selling a Practice

For most physicians, selling a practice is a once-in-a-career event. The buyer across the table — a private equity platform, a hospital system, a consolidator — does it constantly. That asymmetry is the single biggest reason well-run practices sell for less than they should. This guide is here to close some of that gap.

1. How practices are actually valued

Almost all healthcare transactions come down to a simple formula: normalized EBITDA × a multiple. EBITDA is your earnings before interest, taxes, depreciation, and amortization — a proxy for the practice's true cash earning power. "Normalized" is where the work (and the value) lives.

Owners run personal and discretionary expenses through the practice, pay themselves above or below market, and absorb one-time costs. A buyer — and a good advisor — adds those back to show the real, ongoing profitability. A practice reporting $800K in profit might have $1.3M in normalized EBITDA once add-backs are properly documented. At a 7× multiple, that difference is worth $3.5 million.

The number that matters isn't what your accountant reports for taxes. It's defensible, normalized EBITDA — and proving it is half the battle.

Multiples vary widely by specialty, size, growth, and buyer demand. Larger, multi-site groups command higher multiples than solo practices, because scale reduces a buyer's risk and integration cost.

2. Who's buying — and what they want

There are three broad buyer types, and they value your practice differently:

• Private equity platforms. PE-backed groups roll up practices in a specialty. They typically keep physicians on, offer cash plus rollover equity (a stake in the larger platform), and bet on a future "second bite of the apple" when the platform itself sells.
• Strategic / hospital systems. Acquire for referral networks, geographic coverage, or service-line expansion. Often more focused on integration than on your autonomy.
• Other physicians or local groups. Smaller transactions, often relationship-driven, usually at lower multiples but with maximum cultural continuity.

Knowing which buyers are active in your specialty and region right now is what creates competition — and competition is what drives price.

3. How the sale process works

A disciplined sell-side process isn't "find a buyer." It's engineering competition while protecting your confidentiality. In broad strokes: valuation and preparation, building a confidential marketing package, approaching a curated buyer list under NDA, collecting and comparing offers, negotiating a letter of intent, surviving due diligence, and closing. We break this into six phases on our process page.

4. What earns a premium

Two practices with identical revenue can sell for very different numbers. Buyers pay up for:

• Provider depth — value that doesn't walk out the door if one physician retires.
• Favorable payor mix and clean, transparent billing.
• Demonstrated growth — and a credible runway for more.
• Operational systems that make the practice easy to integrate.
• Diversified referral sources rather than dependence on one or two.

5. Mistakes that cost owners millions

• Negotiating with one buyer alone. No competition, no leverage.
• Going to market unprepared. Messy financials invite re-trades and erode trust.
• Focusing only on headline price. Structure, rollover terms, earn-outs, and employment agreements can matter more than the top-line number.
• Underselling add-backs. Every undocumented dollar of normalized EBITDA is multiplied away.
• Waiting until you're burned out. The best time to sell is from a position of strength, not exhaustion.

6. How to prepare (start early)

The owners who achieve the best outcomes usually start 12 to 24 months before going to market. That window lets you clean up financials, document add-backs, address provider concentration, and show a growth trend — all of which lift your multiple. Even if you're years away, an early, confidential conversation costs nothing and can shape the moves you make between now and then.

This guide is general information, not legal, tax, or financial advice, and every situation is different. Talk to qualified advisors about your specific circumstances.