After advising more than 25 physician groups on successful private equity partnerships — and speaking with hundreds more who considered selling — we've seen several common mistakes that can reduce your practice's value or leave you with a bad partner. Here's how to avoid them.
1. Waiting Too Long to Start the Process
PE invests in practices for future cash flow. If you plan to retire soon after the deal — especially if you're a top producer — it can scare off buyers. Most require key owners to keep practicing for at least three, often five, years.
2. Failing to Grow Profits or Diversify Production
Buyers pay a multiple of EBITDA. Bigger, growing practices with multiple providers can command both a higher multiple and higher EBITDA — leading to a much higher valuation and more options.
3. Not Having Your House in Order
- Financials: Maintain accurate monthly financial records and ensure a CPA reviews them at least once a year.
- Regulatory: Follow Anti-Kickback, Stark, HIPAA, and any relevant state rules.
- Employees: Buyers want your providers to stay post-sale. Have valid, signed contracts and retain staff.
- Partners: Align on the timeline, goals, and share of ownership with all partners.
4. Not Using Specialized Advisors — or Signing an LOI Too Soon
Not using specialized advisors can cost you 15–30% (or more) of your practice's value and limit your options to find a good partner. A good sell-side advisor levels the playing field by preparing accurate financials, reaching out to multiple buyers, and guiding you until close.
If you sign a Letter of Intent (LOI) without an advisor, you lose most of your leverage.
Bottom Line: Sell from a position of strength — stay profitable, keep growing, and hire experienced advisors to attract multiple buyers.