Should I sell my practice to private equity?
Selling to private equity (PE) is a transaction where a PE-backed platform acquires majority ownership of your practice while you typically retain partial equity and continue clinical work.
Quick answer
Selling to private equity makes sense if you want partial liquidity, want to grow with capital and infrastructure, and are willing to operate as a partner rather than sole owner; it is wrong if you want full retirement or full operational autonomy.
The detail
PE transactions in healthcare are not retirement events; they are partnerships. Typical structure: 60 to 80 percent of consideration in cash at close, 10 to 30 percent in rollover equity, plus continued employment for 3 to 5 years. The right reasons to sell to PE: you want partial liquidity ($3M to $15M depending on practice size), you want capital and operational infrastructure to grow, you are willing to give up final decision authority on hiring and capital allocation, and you have 5 to 10 more clinical years in you. The wrong reasons: you want to fully retire (you cannot for 3 to 5 years), you want full autonomy (PE platforms standardize operations), or you are tired and want out (post-close transition is harder than current operations). The financial outcome depends heavily on rollover equity performance, which is unknowable at close. Most successful PE outcomes happen when sellers see the second exit as the real money event and the first close as the de-risking event.
Bain Healthcare PE Report tracks deal volume and structure trends across healthcare subsectors annually.
Typical post-close clinical employment commitments run 3 to 5 years.
Source: AHLA Healthcare M&A
Rollover equity performance often determines whether the transaction is a 1x or 3x outcome on total compensation.
Source: Pitchbook Healthcare Services
What this means for clinic owners
From Sorso
PE is a partnership, not an exit. If you want to actually leave clinical practice, sell to another physician or group instead. PE pays more but only for the next chapter of work, not for the end of it.
Related questions
How do PE firms value medical practices?
Private equity firms value medical practices primarily on a multiple of trailing twelve-month adjusted EBITDA, typically 5x to 12x, with the multiple driven by scale, growth, payer mix, and provider retention.
How much will a DSO pay for my dental practice?
DSOs typically pay 5x to 8x EBITDA for single-location and add-on dental acquisitions, and 8x to 11x EBITDA for multi-location platforms with $1M+ in EBITDA, with consideration split between cash, rollover equity, and earnouts.
What are EBITDA add-backs in practice valuation?
EBITDA add-backs are non-recurring or owner-related expenses added back to reported EBITDA to show normalized earnings, typically increasing reported EBITDA by 10 to 30 percent in owner-operated practices.
How do I evaluate a PE offer?
Evaluate a PE offer on six dimensions: enterprise value multiple, cash at close percentage, rollover equity terms, post-close compensation structure, earnout conditions, and platform exit timing assumptions.
Founder of Sorso. 19 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
Want to see how your practice measures up?
Take the 4-minute financial assessment. It is free, and it will show you where your practice is leaking money.