True story, anonymized: A physician founder walks into the first real conversation about selling his practice. Six locations. Decent reputation locally. But reimbursement pressure was building, margins were thinning, and he'd already closed one site. EBITDA sitting at $1M. He's done his research - or what he thinks is research - and he's anchored at 12x. That's $12M in his head. The market is paying 5-6.5x for a profile like his. That's $5-6.5M. The gap between his number and reality is $5.5-7M in value that doesn't exist.
That phantom valuation gap is where more physician practice deals collapse than at any other point in the process. Not diligence findings. Not financing contingencies. The expectation gap.
For bankers, if you let that gap survive into a formal process, you're running a sell-side that delivers bids 50%+ below where the seller anchored. That's a dead engagement and a burned relationship. For corp dev teams, you're spending three months diligencing a practice whose founder will never accept a price the market supports.
The physicians who can't be moved off their number aren't being irrational. They're working with bad information, processed through a lifetime of being right about most things.
Where the Bad Information Comes From
The headline problem
When Cencora exercised its pre-negotiated call option to acquire the remainder of OneOncology at roughly 19x EBITDA - valuing the platform at $7.4B - that made the trade press. But that 19x wasn't a market-clearing auction price. It was a contractual multiple baked into a 2023 deal structure between Cencora and TPG, exercisable between years three and five. Cencora had already purchased a 35% stake and locked in that option on a 250+ physician national platform with drug distribution synergies that most practices will never have. When a 4-physician add-on in suburban Tampa trades at 8x, that doesn't make anyone's newsletter.
The information environment is structurally biased toward platform-level deals. The physician Googling "[specialty] practice valuation multiples" is reading about transactions that look nothing like theirs. Platform deals involve 30+ physicians, multi-state footprints, management infrastructure, and drug distribution synergies that justify premium multiples. A 6-location practice with $1M EBITDA is an add-on acquisition. The economics are fundamentally different.
Covenant Health Advisors' 2025 specialty benchmarks put most specialty care add-ons at 7-9x EBITDA. Industry transaction data generally shows platform transactions in the low-to-mid teens, compared to mid-to-high single digits for add-on acquisitions - a meaningful spread that physicians rarely appreciate. The physician didn't see those numbers. They saw the 19x headline.
The peer network echo chamber
Physicians talk to other physicians. And the conversations about practice sales have all the precision of fish stories.
"My friend's dermatology practice sold for 14x." Maybe. But that friend's practice had 22 locations, $8M EBITDA, a cosmetic revenue mix, and a bidding war between three PE platforms. The physician hearing that story has 6 locations and $1M EBITDA. Those are different transactions with different buyer pools and different multiples. But the number 14x is already lodged.
I've seen this dynamic in every specialty vertical I've worked in. The physician community is tight-knit, and deal terms travel fast - but without the context that makes those terms make sense. By the time the story reaches the third physician, the multiple went up and the caveats disappeared.
The broker anchoring problem
Some intermediaries anchor high to win the mandate. They'll tell the physician "we think we can get you 10-12x" knowing the market will deliver 5-6x. The logic is: win the engagement, run the process, let the market do the re-pricing, then manage expectations on the back end.
It's a strategy. But it creates a dynamic where the physician's first exposure to a professional valuation opinion is an inflated number. By the time the bids come in below that range, the physician feels misled - even if the bids are fair. The deal either dies or closes with a resentful seller, which is almost worse.