How Much Can I Sell My Medical Practice For?

You've spent decades building your practice. Now you want a number. What's it actually worth?

The honest answer: it depends. But that doesn't mean you can't get a solid estimate. This guide breaks down exactly how buyers calculate practice value—and what you can expect in today's market.

The Valuation Formula: It's Simpler Than You Think

Every practice sale starts with the same basic equation:

Practice Value = EBITDA × Multiple

That's it. Two variables. Let's understand both.

What is EBITDA?

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. Think of it as the cash your practice generates from operations—before financing costs and accounting adjustments.

Why EBITDA and not net income? Because buyers want to see what the practice produces regardless of how it's financed or structured. Your tax strategy doesn't affect their operations.

Calculating Your EBITDA

Start with your net income and add back:

• Interest expense
• Income taxes
• Depreciation
• Amortization

But that's just the starting point. Buyers will "normalize" your EBITDA by adding back personal expenses and adjusting for anomalies:

Common Add-Backs (Things That Increase Your EBITDA)

• Owner compensation above market. If you pay yourself $600K but market rate is $450K, that $150K gets added back.
• Personal expenses. Car payments, travel, family member salaries—if it's personal, it's an add-back.
• One-time expenses. Legal settlement last year? That's not recurring.
• Discretionary spending. That expensive consultant you hired once? Add it back.

Common Subtractions (Things That Decrease Your EBITDA)

• Below-market rent. If you own the building and charge the practice below fair market value, buyers will adjust.
• Family members below market. If your spouse does full-time billing for $30K when market rate is $60K, buyers will normalize.
• Deferred maintenance. Equipment that needs replacing? It comes off the top.

What Multiple Will You Get?

The multiple is where things get interesting. It varies dramatically by specialty—and that spread represents real money.

Why the wide ranges? Every practice is different. The range represents the difference between an average practice and an exceptional one.

What Moves You Up (or Down) the Multiple Range?

Factors That Increase Your Multiple

• Multiple providers. Less key-man risk means higher value. A 5-doc practice commands a premium over a solo practice.
• Strong growth trend. 10%+ annual revenue growth catches buyers' attention.
• High commercial payer mix. 60%+ commercial (vs. Medicare/Medicaid) is attractive.
• Ancillary revenue. In-house imaging, pathology, or ASC ownership adds value.
• Long-term lease. 5+ years of runway with reasonable terms.
• Clean books. Professional financials signal a well-run operation.
• Diversified patient base. No single referral source driving >20% of volume.

Factors That Decrease Your Multiple

• Solo practice. High key-man risk = lower multiple.
• Declining revenue. Any downward trend needs to be explained.
• High Medicare/Medicaid mix. Lower reimbursement = lower value.
• Lease problems. Short runway or unfavorable terms.
• Aging equipment. Deferred capex gets deducted.
• Compliance concerns. Any audit history or open issues.
• Staff turnover. Unstable team signals operational problems.

Who's Buying—And Why It Matters

The buyer type significantly affects what you'll receive:

Private Equity / MSO Platforms

• Typical multiples: 5-10x+ (highest for desirable specialties)
• What they want: Scale, growth potential, multi-provider practices
• Trade-off: You'll work 3-5 years post-sale under an employment agreement

Health Systems

• Typical multiples: 3-6x
• What they want: Referral streams, market share, strategic positioning
• Trade-off: You become an employee with all that entails

Individual Physicians

• Typical multiples: 2-4x
• What they want: Turnkey operation, patient base, location
• Trade-off: Financing-dependent, longer timeline, often requires seller financing

Real Examples: What Practices Actually Sell For

These illustrative examples show how the variables combine:

Note: These are illustrative examples based on market data, not actual transactions.

Beyond the Multiple: Other Deal Terms That Affect Your Payout

The headline multiple is just part of the picture. Other terms matter:

Cash at Close vs. Total Consideration

Many deals include holdbacks, earnouts, or seller notes. A "7x deal" might actually be: 5x cash at close + 1x earnout over 2 years + 1x rollover equity.

Rollover Equity

PE buyers often require you to "roll" 10-30% of proceeds into the new entity. This is your "second bite"—potentially worth more than the first if the platform sells successfully.

Employment Terms

Your post-sale compensation affects total economics. A below-market employment agreement subsidizes the purchase price.

Holdbacks and Escrows

5-15% of purchase price may be held for 12-18 months to cover indemnification claims. Usually released in full, but not guaranteed.

What To Do Next

Once you have a rough number in mind:

1. Get a professional valuation. Free calculators are estimates. A formal valuation gives you defensible numbers.
2. Start preparing. 12-24 months of preparation can add 1-2x to your multiple.
3. Understand your options. PE, health system, individual buyer—each path has different economics and lifestyle implications.
4. Assemble your team. M&A attorney, possibly a broker or advisor, and your CPA.

Continue Your Research

• Medical Practice Valuation: Deep dive into valuation methodology
• Sell My Medical Practice: Step-by-step guide to the sale process
• Selling to Private Equity: How PE deals work and what to expect
• Medical Practice Broker: When to hire help and what it costs