Selling to Private Equity

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Private equity has fundamentally changed how physician practices are bought and sold. Over the past decade, PE-backed platforms have acquired thousands of practices across dermatology, ophthalmology, gastroenterology, orthopedics, and other high-value specialties.

If you're a physician owner considering your exit options, you've probably heard the PE buzz. Maybe a platform has already reached out. Before you engage—or dismiss them—you need to understand exactly how these deals work.

The PE Proposition

PE firms typically pay higher multiples than individual physician buyers and often offer rollover equity—giving you a real chance at a "second bite" when the platform eventually sells to the next buyer.

Why Private Equity Wants Your Practice

Let's be direct: PE firms aren't buying practices out of altruism. They're buying cash flow and building scale. Here's the math they're running:

This isn't a critique—it's reality. Understanding their incentives helps you negotiate better.

Typical PE Multiples by Specialty

Specialty Typical PE Multiple Current Activity
Dermatology 7-12x Very Active
Ophthalmology 6-10x Very Active
Gastroenterology 6-9x Active
Orthopedics 5-8x Active
Pain Management 5-7x Moderate
Primary Care 4-6x Selective

Multiples vary based on practice size, growth trajectory, payer mix, and geographic market. These are general ranges—your practice may command more or less.

How the Deal Actually Works

A typical PE transaction isn't a simple cash sale. Here's the structure you'll see:

1. Cash at Close (60-80%)

You receive the majority of your purchase price upfront in cash. This is your "de-risked" money—it's yours regardless of what happens next.

2. Rollover Equity (20-40%)

You're usually required to "roll" a portion of your proceeds into equity in the new platform. This aligns your interests with the PE firm—you're now a shareholder, not just a seller.

Here's where it gets interesting: when the PE firm sells the platform in 4-7 years, your rollover equity participates in that second transaction. If the platform has grown and multiple expansion occurs, your rolled equity could be worth 2-3x what you initially rolled.

Second Bite Example

You sell for $5M, take $4M cash, roll $1M into equity. Five years later, the platform sells at a higher multiple. Your $1M could become $2.5M or more. That's the "second bite."

3. Employment Agreement

PE firms don't buy practices—they buy cash flow. And your cash flow requires you at the helm. Expect a 3-5 year employment contract with:

Platform vs. Tuck-In: What's the Difference?

Your experience post-close depends heavily on which role you're playing:

Platform Acquisition

You're the anchor practice. The PE firm builds around you, and you often retain significant influence (sometimes a management role). Higher multiples, more responsibility, bigger upside.

Tuck-In Acquisition

You're joining an existing platform. Less negotiating leverage, lower multiples, but also less operational burden. You become an employed physician with equity, not a managing partner.

What Changes After You Sell

Let's be honest about what life looks like post-PE:

Is PE Right for You?

PE works best when:

PE is probably wrong if:

What's Your Practice Worth to PE?

Our valuation calculator uses specialty-specific PE multiples to estimate your practice value. It takes 60 seconds.

Request Confidential Valuation

How to Prepare for a PE Exit

  1. Clean your financials. Get 3 years of tax returns and P&Ls in order. Minimize discretionary expenses and document all add-backs.
  2. Reduce key-man risk. If all revenue disappears when you do, that's a problem. Build depth.
  3. Understand your EBITDA. This is the number that drives everything. Know it, and know what's defensible.
  4. Run a process. Never negotiate with one buyer. Competition creates leverage.

Next Steps

Ready to explore your options?