For most specialties, 2026 is a buyer's market. Physician practice deal counts fell for four straight years and dropped by roughly half again in the first half of 2026, and buyers are pushing more of the price into rollover, earnouts, and holdbacks. Prices remain strong for a few things: platform-sized groups, practices with surgery centers, and specialties such as cardiology, urology, and retina where large strategic buyers are active. If your practice is a small add-on in dermatology, dental, or anesthesia, expect a lower multiple and less room to negotiate than sellers had in 2021.
" - q: "How do I know if the offer is fair?" a: "Compare the multiple to the reported range for your specialty and size, and check what the buyer did to your EBITDA to get there. A quality of earnings review often lowers your profit number by subtracting the pay cut the buyer plans for you. An offer of 9x that assumes a 30 percent scrape is a different offer from 9x on your actual profit. A banker or a second buyer is the most reliable test of fairness; a single unsolicited offer is not.
" - q: "Do I have to sell just because my senior partners want to?" a: "Usually you cannot be forced to sell your own shares unless your shareholder agreement has a drag-along right, which many do. Read that agreement first. If a majority can compel the sale, your best remaining levers are the employment agreement and the allocation of price among partners, since partners are often not paid the same.
" - q: "What is the difference between a platform and an add-on?" a: "A platform is the first, largest practice a private equity firm buys in a specialty, and it becomes the base that other practices are attached to. An add-on, or tuck-in, is a smaller practice bought later and folded into the platform. Platforms sell for roughly 3 to 5 turns of EBITDA more than add-ons because the buyer is paying for a management team and a growth story, not only for your patients.
" - q: "Will I still be able to recruit after we sell?" a: "It is harder. New associates are offered employment with the management company rather than a path to ownership, and research on ophthalmology found turnover roughly doubled after acquisition. Some platforms offer incentive equity to recruits, and that helps. Ask the buyer to show you its recruiting record at practices it bought two or more years ago.
" - q: "What happens to my rollover if the platform is resold or goes bankrupt?" a: "When the platform sells, your rollover is usually cashed out or exchanged for shares in the next owner, at whatever price the new buyer pays after lenders and preferred investors are paid. If the platform restructures in bankruptcy, ownership usually passes to the lenders and common equity is left with little or nothing, which is what happened at Envision in 2023. Rollover is a minority, illiquid stake that can be worth zero, and it should be sized in your plan that way.
" - q: "Should I hire an investment banker, and who pays?" a: "For a practice large enough to attract several buyers, a banker usually pays for itself by creating competition and by pushing back on the quality of earnings adjustments. The seller pays, typically a percentage of the price. For a small single-buyer add-on, a healthcare transaction attorney and a CPA who has seen these deals may be enough.
" - q: "What is the alternative to selling to private equity?" a: "The main alternatives are staying independent and hiring management help, merging with another independent group to get scale, selling to or joining a hospital system, and, for larger groups, an employee stock ownership plan. Each changes your income and control differently, and none produces the same lump sum. The right comparison is your after-tax cash and expected lifetime income under each path, not the headline price.
" - q: "How much of the sale is really mine after partners, fees, taxes, and rollover?" a: "Often about half of your share of the headline number arrives as cash after closing. A 30 percent rollover, a holdback, banker and legal fees, and federal and state tax on the cash portion account for the difference. Our after-tax proceeds calculator walks through each step with your own numbers.
" item_list: name: "Eight questions to answer before you sign a letter of intent" items: - "What is my EBITDA after the buyer's planned pay cut, and what multiple is being paid on that number?" - "Is this a platform price or an add-on price, and is there a second bidder?" - "How much is cash at closing, and how much is rollover, holdback, earnout, or seller note?" - "What will my base salary and production pay be in year one, and what is the path back to my current income?" - "How long is the employment term, and what do I repay if I leave early?" - "What is the non-compete radius and term, and does it survive a sale of the platform?" - "Where does my rollover sit in the waterfall, and what preferred return is ahead of it?" - "How much of the price is allocated to goodwill versus non-compete, consulting, and receivables?" llms_summary: "Explains for physicians and dentists whether and when to sell a practice to a private equity backed platform in 2026. Describes what a rollup is, why platforms sell for 3 to 5 more turns of EBITDA than add-ons, and how a deal moves from approach to indication of interest, letter of intent, exclusivity, quality of earnings review, purchase agreement, and closing. Covers what the seller receives (cash, rollover equity, holdback, earnout) and what changes after (20 to 30 percent scrape, base salary of 40 to 50 percent of pay, management fee, non-competes, three-year lock-ups with clawback). Summarizes the 2026 market (deal counts down roughly half, 8 to 10 year holds, strategic buyers in GI, urology, and retina) and the outcomes research (Singh, JAMA Health Forum 2022; Health Affairs 2025 turnover; JAMA Health Forum 2025). Lists who should not sell and the alternatives." ---A private equity firm is an investment company that buys businesses using its investors' money plus borrowed money, works to make them larger and more profitable, and sells them again in a few years. A rollup is a strategy of buying many small businesses in the same field and combining them into one large company, called a platform. The entity the private equity firm actually owns is a management services organization, or MSO. Our MSO page explains why the buyer does not simply purchase your medical practice outright.
Physician practices attract this strategy because most are small, owned by physicians near retirement with no buyer other than a younger partner, and carry costs a larger group can spread out. A large group can also collect more per visit. A September 2022 study in JAMA Health Forum by Singh and colleagues followed 578 dermatology, gastroenterology, and ophthalmology practices after private equity acquisition and found charges per claim rose about 20 percent, allowed amounts rose about 11 percent, and new-patient visits rose about 38 percent.
The American Medical Association's 2024 benchmark survey put 6.5 percent of physicians in private equity owned practices, up from 4.5 percent in 2022, while the share in physician-owned private practice fell to 42.2 percent from 60.1 percent in 2012.
A platform is the first and largest practice a private equity firm buys in a specialty, and everything bought afterward is attached to it. An add-on, sometimes called a tuck-in, is a smaller practice bought later and folded in. Platforms sell for roughly 3 to 5 turns of EBITDA more than add-ons in the same specialty. EBITDA is your practice's yearly profit before interest, taxes, depreciation, and amortization, and a turn is one multiple of that profit.
The gap exists because a platform buyer is paying for a management team, a brand, payer contracts, and a base it can grow. An add-on buyer already has all of that and only needs your practice's earnings. In dermatology, the most mature specialty for this strategy, reported multiples run roughly 4 to 7x for small practices, 7 to 10x for mid-sized groups, and 12 to 15x for platforms, according to sell-side trackers such as FOCUS Investment Banking's November 2025 report. Our specialty pages give the reported ranges for eight fields. A single-office practice with three physicians is an add-on almost everywhere, so what the platform sold for two years ago has little to do with what your practice will receive.
Most deals move through the same stages. Knowing the order shows you where your bargaining position is strongest and where it disappears.
A platform's business development team, a banker, or a physician who already sold reaches out and asks for financials. What you share here shapes every later number, so have a CPA review your books first.
The buyer sends a non-binding range, usually a multiple of your adjusted EBITDA. Several buyers can be at this stage at once, and this is where competition is easiest to create.
The letter of intent, or LOI, sets the headline price, the cash and rollover split, and the broad shape of your employment. Most of it is non-binding. The exclusivity clause is binding.
For a set period you agree not to talk to other buyers. Your bargaining position falls sharply the day exclusivity starts, because walking away means starting over. Every term you care about should be in the LOI before you sign it.
The buyer hires an accounting firm to redo your profit number. The review removes one-time items and, most importantly, subtracts the pay cut the buyer plans for you. Many physicians find their EBITDA is lower than they calculated, and the price is often renegotiated downward while you are locked into exclusivity.
The purchase agreement sets the price allocation that determines your tax bill (see how a practice sale is taxed). The employment agreement sets your pay, term, non-compete, and what happens if you leave.
Cash is wired, less any holdback, and your rollover equity is issued. You become an employee of the practice entity, now managed by the MSO.
The headline price is the enterprise value. What reaches you comes in up to four pieces.
| Piece | Typical share of price | When you get it | What can go wrong |
|---|---|---|---|
| Cash at closing | 60 to 70 percent | Closing day | Reduced by holdback and by any purchase price adjustment after the quality of earnings review |
| Rollover equity | 30 to 40 percent | At the platform's next sale, often 8 to 10 years out | Minority, illiquid, behind lenders and preferred investors; can be worth zero |
| Holdback or escrow | Varies | One to two years after closing | Reduced for indemnity claims or a shortfall in working capital |
| Earnout | Varies; more common since 2025 | Only if targets are met | Targets set on numbers the buyer now controls; may be taxed as compensation if tied to employment |
The 70 percent cash and 30 percent rollover split is the textbook baseline. In 2025 and 2026, buyers push more of the price into rollover, earnouts, holdbacks, and seller notes, which shifts risk to you. Our rollover equity page explains how the rollover is valued and where it sits in the payout order. The second bite page looks at how often it has actually paid out.
In a physician-owned practice, most of the profit was your income. To create the EBITDA it is paying for, the buyer takes 20 to 30 percent of practice profits out of physician pay, a step called the scrape (Commonwealth Fund, April 2026). Your purchase price is a multiple of that forgone income. Base salary typically becomes 40 to 50 percent of your pay, compared with 60 to 80 percent before, with the rest tied to production at reported rates of $40 to $70 per wRVU. Income repair, the path back to your old income, is a promise rather than a guarantee. Our page on what happens to your salary works through an example.
A three-year minimum term with a clawback of part of the lump sum if you leave early is standard, and five-year agreements are common. The non-compete is universal and, because it is tied to the sale of a business, survives even in states that limit employment non-competes.
The MSO charges the practice entity a fee for running the business, paid before physicians are. The Commonwealth Fund's April 2026 review found physician dissatisfaction centers on opaque accounting, rising management fees, salary caps, and non-competes.
Every management agreement says physicians control clinical decisions. In practice, the MSO controls staffing, scheduling, purchasing, and often payer contracting. California's SB 351, in effect since January 1, 2026, bars private equity groups from interfering with a list of those decisions, which tells you where the friction has been.
A March 2025 Health Affairs study by Singh and colleagues found clinician turnover in ophthalmology practices rose from about 9 percent to about 22 percent after private equity acquisition. A February 2025 JAMA Health Forum study found that after a private equity owner exited, physicians were 16.5 percentage points less likely to still be at the practice two years later.
It is two markets at once. Very large groups in a few specialties are selling to strategic buyers at high prices, while ordinary practice deals have slowed sharply. PitchBook counted 851 physician practice management deals in 2021, 473 in 2024, and roughly 390 in 2025. Quarterly counts then fell from 102 in the last quarter of 2025 to 71 in the second quarter of 2026, and STAT reported on August 17, 2026 that volume dropped by roughly half in the first half of the year. Bain's 2026 healthcare report notes that 2025 was a record year for healthcare private equity as a whole, at roughly $190 billion, but physician groups' share of provider deals fell from 28 percent in 2021 to 23 percent in 2025.
The exits that did happen tell the other story. Cardinal Health bought 73 percent of GI Alliance for $2.8 billion in January 2025 and 75 percent of Solaris Health, a urology platform, for $1.9 billion in late 2025. Cencora bought Retina Consultants of America for $4.6 billion plus $500 million contingent in January 2025. These are drug distributors and insurers buying physician platforms, not private equity firms trading with each other. That kind of buyer exists in gastroenterology, urology, retina, and oncology. It does not exist, so far, in dermatology, dental, or anesthesia.
Holds are longer. Recapitalizations, the sales from one private equity firm to another that produce the second bite, fell from about 100 a year in 2021 and 2022 to 13 in 2024, and expected holds are now 8 to 10 years instead of 5 to 7. Public healthcare services companies traded at a median of about 11.5 times EBITDA in 2025, down from 14.5 in 2024, which caps what a buyer can pay for you and still make money.
If you are an add-on in a saturated specialty, the buyer knows there are fewer competing bidders than in 2021 and will structure the offer accordingly, with more rollover and more deferred payment. That does not make the offer bad. It means the terms, not the headline multiple, are where the deal is won or lost.
A lump sum taxed mostly at 20 percent federal capital gains is worth more, after tax, than the same dollars earned as salary at 37 percent over the next several years. A physician within five to ten years of retirement may have no other buyer who can pay anything close to a platform price. Reimbursement pressure is real: the 2026 Medicare fee schedule cut cataract surgeon fees 11 percent and endoscopy facility payments about 8 percent, and a larger group has more room to absorb that. Some owners simply want to stop running a business. The Commonwealth Fund's April 2026 review found satisfaction was highest where physicians held equity and board seats, so the structure of the deal shapes how it feels to live inside it.
The lump sum is a prepayment of your own future income. If you would have kept practicing for fifteen years anyway, you may be selling fifteen years of a 20 to 30 percent pay cut for a payment sized on five to eight years of it. Rollover equity is a concentrated, illiquid position in a company with debt that you do not control, and no dataset we could find shows how often physician rollover has actually paid out. Recruiting gets harder and colleagues leave. You cannot easily reverse the decision, and the non-compete keeps you from rebuilding nearby. The popular advice that prices only go up, so you must hurry, has not held up either: anesthesia multiples are reported 2 to 3 turns below their 2021 and 2022 peaks.
You should probably not sell to private equity if any of the following describes you.
Staying independent is still the choice of 42 percent of physicians, and contracting with an MSO you do not sell to can capture some of the efficiency without giving up ownership. Merging with another independent group builds scale and preserves the option to sell later as a larger, more valuable group. Hospital employment gives a stable salary and no rollover risk, at the cost of ownership and often at a lower price. An employee stock ownership plan, or ESOP, lets a larger group sell to a trust for its own employees with tax advantages, though it requires size and takes years to set up. The right comparison across all of these is lifetime income and cash under each path, not the headline price of the one offer on your desk.
Subtract a 20 to 30 percent scrape from physician pay, remove one-time items, and see what multiple the offer really represents. Then compare it to the reported range for your specialty and size.
Use the after-tax proceeds calculator to move from headline price to cash in hand after rollover, holdback, fees, and tax. Read how a practice sale is taxed to see why the allocation matters.
Base salary, production formula, term, clawback, non-compete radius, and who pays tail coverage all belong in the letter of intent, before exclusivity starts. Our list of ten mistakes physicians make covers what is usually left out.
A healthcare transaction attorney is not optional. A banker makes sense when your practice can attract more than one buyer. Financial planning before the LOI matters because the deal changes your income, your tax bracket, and your net worth at once. If the offer is small and you are near retirement, a good attorney and CPA may be all you need.