I spent a good part of my career on the buy side of healthcare M&A. I built the target lists, scored the practices, sat across from the founder-owner physicians, underwrote the deals, and negotiated them.
So I can tell you what a buyer sees when they pull up your practice. It is rarely what most physician owners expect.
The Conversation That Keeps Happening
Over my career I have talked to dozens of physician practice owners across a multitude of specialties. The most common question, by far, is some version of:
"What do you think my practice is worth?"
My answer is usually the same. I don't know yet. Because the number on your tax return and the number a buyer puts on a term sheet are built from completely different inputs.
Here is what I mean.
What You Think Matters vs. What Actually Matters
Most physician owners anchor on revenue. "We do $8M a year." That is a data point, not a valuation.
The buyer is looking at something else. They are running your practice through a filter that has almost nothing to do with how good you are at medicine and everything to do with how acquirable your business is.
Here are the five things a buyer works through before they ever pick up the phone.
1. Provider economics, not practice economics.
A buyer does not care that the practice does $8M. They care what each provider generates, how that breaks down between E&M and procedures, what the ancillary revenue looks like (imaging, infusion, pharmacy, ASC), and how dependent total revenue is on one or two high-producing physicians. If 60% of your revenue walks out the door when the founder retires, that is not an $8M practice. That is a $3M practice carrying a $5M key-man risk.
2. Payer mix and contract quality.
Commercial lives vs. Medicare vs. Medicaid tells a buyer most of what they need to know about margin sustainability. A practice with 70% commercial payer mix in a growing MSA is a fundamentally different asset than one running 60% Medicare in a rural market. The buyer is also looking at the contracts themselves. Are you in-network with the right plans? Are your reimbursement rates competitive, or are you leaving money on the table that a platform operator could renegotiate on Day 1?
3. Operational readiness.
This is the gap most owners do not see, because they are inside it every day. How clean is your billing? What is your days-in-AR? Do you have an office manager who runs everything out of their head, or a documented workflow that survives if that person leaves? Do your cost centers make sense, or is everything lumped into one P&L that a diligence team will spend three weeks untangling?
A buyer will spend more time in your billing data than in your clinical outcomes. Clinical outcomes still matter. But billing data tells them how much work it takes post-close to get the practice running on their systems, and that work has a price.
4. Competitive positioning.
Where you sit in your market relative to other practices, and relative to the platforms already consolidating around you. Are you the last independent in a market where a PE-backed group just acquired your two biggest competitors? That changes your leverage completely. Or are you one of 40 independents in a market with no consolidation activity, in which case the buyer's urgency is lower and so is your price.
Most physician owners have no idea who else has been acquired in their MSA, which platforms are active, or what that means for their own negotiating position. From what I have seen, that context is often what separates a $2M EBITDA practice that sells for 8x from one that sells for 12x.
5. Succession signals.
This one is uncomfortable, but it is real. Buyers are reading your age, tenure, partner demographics, and lease terms. A 62-year-old founder with a lease expiring in 18 months and no junior partners sends a specific signal: this practice is going to transact whether the owner wants it to or not. Buyers who see that signal know they have time on their side. The owners who plan 3 to 5 years ahead and control their own timeline tend to get materially better terms.