Key Takeaways
- Private equity buyers in health care expect post-sale commitments, rollover equity participation and lifestyle alignment, which makes early planning essential to protect practice value.
- Medical and dental practice sales require readiness across financial, personal and legal domains, including EBITDA normalization, estate planning and an experienced advisory team.
- Specialty attractiveness, cash flow predictability and reimbursement trends drive private equity demand, making timing and market alignment critical to maximizing sale outcomes.
For many health care practice owners, selling a medical or dental practice represents the most significant financial and professional transition of their career and private equity is increasingly part of that conversation. While private equity transactions in health care can offer liquidity, growth opportunities and a potential “second bite of the apple,” they also require careful planning around timing, post-sale commitments, financial readiness and life beyond clinical practice. Practice owners who start preparing early are better positioned to protect value, expand their options and navigate the process with confidence.
Read on to explore the key considerations every physician and dentist should evaluate before engaging private equity.
Exploring Your Transition Options
You’ve done the hard part. Years of medical or dental school, long hours, building a reputation, cultivating a loyal patient base and creating a practice that reflects your professional values. Now, perhaps for the first time, you’re starting to think about that “S” word … succession.
There are a number of things to think about when the time comes for a succession plan for your practice. For many, it’s knowing where to start that makes our health care provider clients want to kick the can down the road a little while longer.
The truth is there are several viable paths for transitioning a medical or dental practice and the right one depends on your goals, your timeline and the current market. Common options include:
- Selling to private equity or a strategic buyer
- Selling to hospital for employment opportunity
- Transitioning ownership to practice associates
- Selling to a third-party practitioner
- Exploring employee-led ownership structures
In this article, we’ll focus specifically on selling to private equity – a path that has become increasingly common across many medical and dental specialties.
Understanding Private Equity in Health Care
Private equity interest in health care remains strong, but it is not uniform. Certain specialties are more attractive than others due to scalability, predictable cash flow and reimbursement dynamics. Understanding how your specialty is perceived in the current market is a critical first step and timing matters.
Beyond market demand, practice owners considering selling to private equity should evaluate several key questions:
- How Long Do You Want to Keep Practicing? Private equity buyers typically expect practice owners to remain with the practice for a defined period post-transaction. The longer the required commitment, the more compensation is often shifted from salary to deal economics, something that directly affects take-home income. Aligning deal structure with your desired lifestyle and career timeline is essential.
- Are You Comfortable with Rollover Equity? Most private equity transactions include a portion of the purchase price paid as rollover equity, often referred to as “the second bite of the apple.” This can be a powerful wealth-building opportunity, but it also introduces new risk. Understanding how that equity works, how it may be monetized later and how it fits into your broader financial plan is crucial.
- What Will Life Look Like After the Sale? Selling a practice isn’t just a financial event – it’s a personal one. Health care practice owners should consider what their days will look like, first as an employed provider in the near term and later when clinical responsibilities fully transition at the end of the employment term. How does your spouse or family fit into that vision? Have you discussed expectations and timing together? These conversations are often overlooked but consequential.
How to Prepare Your Medical or Dental Practice for Sale
Even in a strong market, not every practice is “deal-ready.” Successfully selling a medical or dental practice to private equity requires preparation across multiple dimensions. Three areas consistently determine both valuation and deal efficiency:
- Is Your Practice’s Financial House in Order? Buyers will conduct due diligence. Clean organizational documents, accurate and timely financials, a clear calculation of normalized earnings before interest, taxes, depreciation and amortization (EBITDA) and a credible quality of earnings analysis are no longer optional; they are fundamental expectations in today’s market. Preparing in advance can significantly improve outcomes and reduce friction during negotiations.
- Is Your Personal House in Order? A practice sale often represents the most significant liquidity event of a practitioner’s career. Estate planning, tax strategy and wealth transition planning should be addressed before a transaction – not after. Advance planning creates flexibility, optimizes tax efficiency and preserves value.
- Is Your Professional Team in Place? Successful transactions are rarely solo efforts. Practice owners benefit from a coordinated advisory team that may include:
- A tax advisor with health care transaction experience
- A specialized health care attorney
- An investment banker or deal advisor
- A personal financial planner aligned with post-transaction goals
Equally important is having an advisor who can quarterback the process and help ensure that each decision supports the bigger picture and consistently advocates for your best interests. This is where PKF O’Connor Davies provides value beyond traditional compliance services.
Planning Ahead for a Practice Sale
The most successful practice sales are unhurried and intentional, well-planned and aligned with both professional and personal goals. Whether a transaction is two years away or ten, early preparation expands your options and improves outcomes.
If you are considering selling your medical or dental practice or simply want to understand what your options could look like, we’d welcome the conversation. Our Firm works closely with practice owners to prepare medical and dental practices for sale, evaluate strategic alternatives and navigate complex transitions with clarity and confidence.
Contact Us
To explore how we can partner with you in preparing your practice (and yourself) for the next chapter, please contact your PKF O’Connor Davies client service team or:
Kerry Serritella, CPA
Partner
Medical Practice
kserritella@pkfod.com | 845.670.7129
Michael Curtiss, CPA
Partner
Advisory Services
mcurtiss@pkfod.com | 617.285.0834