What to expect during a private equity acquisition of your medical practice
Estimated Read Time: 6 minutes
In most states, private equity firms buy medical practices through a management services organization (MSO). The MSO buys the practice’s nonclinical operations, while a physician-owned professional entity continues to provide patient care. Most offers combine cash at closing with rollover equity in a larger platform, so the structure of your deal can affect your ultimate cash payout as much as the headline multiple does.
In this article, you will learn:
Private equity firms look for stable businesses with recurring revenue and an opportunity to grow. Generally, physician practices enjoy strong patient demand, which provides both stability and opportunities to grow. Many patients return for repeat visits, especially in certain specialties, making future earnings much easier to forecast. Finally, independent practices remain fragmented in most markets, giving buyers opportunities to create regional groups through a series of acquisitions.
Specialties with procedural revenue often attract the most interest since ancillary services, such as ambulatory surgery centers (ASCs), cath labs, and imaging, generate earnings beyond office visits. Drug revenue is also an important component in certain specialties.
Today, platforms are typically successful private-equity-backed companies that have completed a number of acquisitions, integrated those practices, and grown them organically over a 3-7-year hold period. Certain very large practices, which are sometimes the foundation of a new group, are also referred to as “platforms” and can receive premium pricing. Most transactions today are “add-on” acquisitions, where a practice joins an existing platform.
The 2025 benchmarks below show typical enterprise value to EBITDA (EV/EBITDA) multiples for each deal type across common physician specialties. These are illustrative ranges only, and individual deals vary widely.
| Specialty | Platform (EV/EBITDA) | Add-On (EV/EBITDA) | Primary Value Drivers |
| Ophthalmology (incl. retina) | 14–20× | 7–11× | ASC ownership, premium lens conversion, strong retina operations |
| Cardiology | 12–15× | 8–12× | Strong procedural margins and ancillary revenue sources |
| Gastroenterology | 10–14× | 7–9× | Endoscopy center ownership |
| Orthopedics & sports medicine | 9–13× | 6–9× | ASC, imaging, PT and other ancillaries |
| Women’s health (OB/GYN) | 10–14× | 5–8× | Fertility programs drive premiums |
| Primary care / multi-specialty | 8–12× | 3–6× | Value-based care success, effective midlevel utilization |
Source: works cited combined with guidance from internal bankers, based generally on knowledge and experience. Actual pricing varies with each transaction based on many factors. Intended for educational purposes only and not a guarantee of any outcome.
Corporate practice of medicine laws in most states prevent investors who are not physicians from owning a medical practice outright. Private equity firms work within these laws by acquiring a management services organization (MSO) that owns the practice’s nonclinical assets. The MSO then handles administration under a long-term services agreement, while the physician-owned professional entity continues to treat patients.
Most offers combine cash at closing with rollover equity in the new platform. Your rollover stake may give you a second payout if the platform is sold to another buyer, and the size of that stake varies with each deal.
Here is what each deal component can mean for your ultimate payout.
| Deal Component | How It Works | What It Means for You |
| Cash at closing | The buyer pays this portion on the closing date | You receive cash on day one |
| Rollover equity | You reinvest part of your proceeds in the platform | You share in the gain if the platform achieves a successful sale |
| Earnout | The buyer pays more if the practice meets agreed targets after the sale | Part of your price depends on future results |
| Employment agreement | You sign a multi-year contract to keep practicing after the sale | The contract defines your post-sale compensation |
Most private equity acquisitions follow the same steps, from first contact to closing. Preparing your practice before you begin engaging buyers puts you in a stronger negotiating position. Buyers may lower their offers when due diligence uncovers problems that were not addressed or disclosed earlier in the process.
Here is what normally happens:
| Stage | What the Buyer Does | What You Can Prepare |
| Initial outreach | Requests financial statements under a nondisclosure agreement | Historical financials with owner expenses and other key adjustments identified |
| Indication of interest | Proposes a preliminary valuation range | Generally, the price and terms you need to make a deal worthwhile |
| Letter of intent | Commits to proposed terms during an exclusivity period | Your priorities for rollover equity, employment agreement, and other key terms |
| Due diligence | Commissions a quality of earnings (QoE) review of your financials | Organized financial and RCM records that are up to date |
| Definitive agreements | Drafts the purchase agreement that governs the sale | Experienced healthcare transaction counsel to review and negotiate legal terms |
| Closing | Funds the cash portion of your price | A plan to notify staff and achieve a successful transition to the new platform |
Buyers value your practice based on normalized EBITDA, which adjusts your reported earnings to reflect the earnings a buyer would receive after closing. This often includes adjusting to market-rate compensation for each physician-owner. The median EV/EBITDA multiple across healthcare was 11.5× in 2025, including very large transactions. The multiple applied in your transaction depends on many factors, including the following examples:
| Valuation Factor | What Buyers Look For |
| Owner dependence | A strong bench of providers with diverse revenue generation |
| Ancillary services | Revenue beyond office visits, such as an owned ASC |
| Payer mix | A balanced base of commercial payer contracts |
| Billing compliance | Clean coding audits from recent years |
| Value-based care | Proven results in accountable care organization (ACO) contracts |
Source: works cited combined with guidance from internal bankers, based generally on knowledge and experience. Actual pricing varies with each transaction based on many factors. Intended for educational purposes only and not a guarantee of any outcome.
FOCUS Investment Banking specializes in maximizing transaction value for healthcare practice owners through our proven quarterback approach to M&A advisory.
If you would like to learn more about our healthcare investment banking services, you can reach out to Eric Yetter or Andy Snyder.
Eric Yetter
Managing Director
Managing Director
Whether you’re exploring a sale, raising capital, or simply want an outside perspective on where your business stands, our bankers are ready to listen. Reach out to start a confidential conversation with the FOCUS team.
