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re: Should I sell my medical practice? New update page 4
Posted on 6/28/25 at 11:33 pm to SmackoverHawg
Posted on 6/28/25 at 11:33 pm to SmackoverHawg
Thanks Smackover. You seem to have a lot of insight into this world. I think I am going to counter at 1.8m, citing them taking my AR but leaving me with the debt as the reason. We also valued it without another little service line that runs through the first office but as a seperate LLC. It’s only about 20k a year in revenue but with a 5x multiplier it should be good for another 100k. With that and the AR/debt consideration and just a general counter I think 1.8 is appropriate.
1
Posted on 6/29/25 at 9:08 am to Saint5446
Sell it. I’ll be your deal attorney 
Posted on 6/29/25 at 9:09 am to Saint5446
Have you had a third party valuation done recently?
Posted on 6/29/25 at 10:37 am to AllbyMyRelf
quote:
Have you had a third party valuation done recently?
^ this
Posted on 6/29/25 at 12:07 pm to lgtiger
I have not. But as the owner, I can say it's not without its issues.
I have done a LOT of research on appropriate multiples, and I'm not sure I get another off ramp quite this good for a while.
Another consideration here is my wife and I don't necessarily love where we live, but have been kind of anchored here due to the businesses. If we were to ever make a move, this would be the kind of thing that would eliminate the debt, give us a chunk of cash, and completely untether us from our current city and all of the problems that come with living here. That is a whole separate aspect of this that makes this an extremely appealing situation for me.
I have done a LOT of research on appropriate multiples, and I'm not sure I get another off ramp quite this good for a while.
Another consideration here is my wife and I don't necessarily love where we live, but have been kind of anchored here due to the businesses. If we were to ever make a move, this would be the kind of thing that would eliminate the debt, give us a chunk of cash, and completely untether us from our current city and all of the problems that come with living here. That is a whole separate aspect of this that makes this an extremely appealing situation for me.
This post was edited on 6/29/25 at 12:08 pm
Posted on 6/29/25 at 5:34 pm to Saint5446
I would recommend getting a valuation done. If your operation is not extremely complicated, it shouldn’t be too expensive.
If you’re getting bought by PE, be aware that they run with set purchase agreement templates that are very buyer friendly. Get an attorney who does M&A. They will help shift risk and make sure you’re not putting your proceeds too much at stake for indemnification.
If you’re getting bought by PE, be aware that they run with set purchase agreement templates that are very buyer friendly. Get an attorney who does M&A. They will help shift risk and make sure you’re not putting your proceeds too much at stake for indemnification.
Posted on 6/29/25 at 5:40 pm to Saint5446
Time value of money says take the deal.
Worst case scenario is you bail after your non-compete expires and start over with their money in your pocket.
Have a qualified attorney review the proposal, if they want your participation badly enough, they’ll be amenable to alterations to the proposal.
Consult with a tax attorney & CPA on how to structure the deal.
Good luck & congrats.
Worst case scenario is you bail after your non-compete expires and start over with their money in your pocket.
Have a qualified attorney review the proposal, if they want your participation badly enough, they’ll be amenable to alterations to the proposal.
Consult with a tax attorney & CPA on how to structure the deal.
Good luck & congrats.
This post was edited on 6/29/25 at 5:43 pm
Posted on 6/29/25 at 6:03 pm to soccerfüt
quote:Agreed, do the above and counter for more money. You will be happier long term
Have a qualified attorney review the proposal, if they want your participation badly enough, they’ll be amenable to alterations to the proposal. Consult with a tax attorney & CPA on how to structure the deal.
Posted on 6/29/25 at 7:06 pm to Saint5446
quote:
There is an option to reinvest some of the sale proceeds (up to 20%) into the parent company, who wants to turn around and flip to larger private equity in 18-24 months, and are (reportedly but speculatively) anticipating a 180-220% return on anything reinvested when they sell to larger private equity. This is the elusive "second bite of the apple" that is often marketed to people in my position.
The first thing you need to do Monday morning is make an appointment with a business attorney.
You seem like a bright, hard working guy but if you are dealing with PE you are playing another mans game. They buy and sell shite all day, you have one bite at the apple.
It wont take a good attorney more than 10 minutes to get his arms around this and help you figure out a counter. The paragraph I quoted is.....concerning.
Not a CPA, not a divorce lawyer, an attorney that specializes in business transactions.
Posted on 6/29/25 at 7:47 pm to Lakeboy7
That's good advice. Thank you for the reality check.
Not looking to reinvest with them. Honestly I am looking to get paid, collect bonuses for 2 years, then move on to the next venture.
This group's current CEO is a healthcare professional and upper management is all healthcare professionals of the same discipline. "Soft" private equity. They want to flip to true money people in a few years, and I don't intend to be around when that happens.
I think a transaction attorney is great advice though. I have gotten a ton of things to think about in this thread, grateful for the continued discussion and humbled by the whole process.
Not looking to reinvest with them. Honestly I am looking to get paid, collect bonuses for 2 years, then move on to the next venture.
This group's current CEO is a healthcare professional and upper management is all healthcare professionals of the same discipline. "Soft" private equity. They want to flip to true money people in a few years, and I don't intend to be around when that happens.
I think a transaction attorney is great advice though. I have gotten a ton of things to think about in this thread, grateful for the continued discussion and humbled by the whole process.
Posted on 6/29/25 at 8:10 pm to Saint5446
quote:
transaction attorney
Ask around. There will be guys in your community that do this kind of work.
Its a strait forward transaction and you need the objectivity. Its your baby. Unload the transaction part on a pro and you can focus on the way ahead financially and taking care of the family.
You make mistakes when you try to do everything.
Posted on 6/29/25 at 8:42 pm to Saint5446
quote:You don’t want just a “business” attorney or a “transaction” attorney. You need an M&A attorney. You can get away with staffing lean on this deal since it’s pretty small, but ideally you’ll have an M&A attorney, an accountant to work with the attorney to structure the deal/ consult on tax, and an employment specialist to help negotiate your agreement for post-closing services/ benefits.
I think a transaction attorney is great advice though. I have gotten a ton of things to think about in this thread, grateful for the continued discussion and humbled by the whole process.
If you need a referral, I can provide one to you. Let me know if you want to connect.
Posted on 6/30/25 at 1:53 pm to Saint5446
That’s a lot of stress and headache for 225/yr. Take it and run.
Posted on 7/2/25 at 11:54 am to Saint5446
I'd sell. But negotiate the yearly salary because you'll be taking on 3 additional offices to manage. Enjoy!
Posted on 7/2/25 at 1:50 pm to Saint5446
Read through several responses and going to put you some things to consider rather than replying to all of them.
- Contact a CPA and attorney that understands M&A ASAP.
- Do not sign the LOI until the attorney looks at it. If it is not in the LOI, it will not be in the purchase agreement.
- You debt will either be paid by the proceeds or will be adjusted in NWC (net working capital).
- The NWC target will be a point of negotiation. If you have excess it will increase the purchase price, if you have a deficiency they will reduce it off the top at closing. You should have a good feel for 45-90 days of NWC as that is the range they will expect. Since you said cash flow can be tricky because of insurance, I would anticipate they will want closer to 90.
- This will have components of both ordinary income and capital gains for you. It will either be structed as an asset purchase (most likely since they don't want your past issues) or will be a stock purchase with a 338(h)(10) election to treat it as an asset purchase for tax purposes. What the IRS calls "hot assets" will be treated as ordinary income (AR, depreciation recapture).
- The LOI is the best deal you will get and will only be negotiated down during the APA.
- I always tell clients to assume you not receive any of the earnouts or contingent bonuses when evaluating the deal. You are not in control anymore so take those off the table.
- Do not skimp on professional services. Hire a really respected M&A attorney and CPA.
- There is no such thing as handshake agreements or verbal assurances. It has to be in the APA and detailed out.
- Contact a CPA and attorney that understands M&A ASAP.
- Do not sign the LOI until the attorney looks at it. If it is not in the LOI, it will not be in the purchase agreement.
- You debt will either be paid by the proceeds or will be adjusted in NWC (net working capital).
- The NWC target will be a point of negotiation. If you have excess it will increase the purchase price, if you have a deficiency they will reduce it off the top at closing. You should have a good feel for 45-90 days of NWC as that is the range they will expect. Since you said cash flow can be tricky because of insurance, I would anticipate they will want closer to 90.
- This will have components of both ordinary income and capital gains for you. It will either be structed as an asset purchase (most likely since they don't want your past issues) or will be a stock purchase with a 338(h)(10) election to treat it as an asset purchase for tax purposes. What the IRS calls "hot assets" will be treated as ordinary income (AR, depreciation recapture).
- The LOI is the best deal you will get and will only be negotiated down during the APA.
- I always tell clients to assume you not receive any of the earnouts or contingent bonuses when evaluating the deal. You are not in control anymore so take those off the table.
- Do not skimp on professional services. Hire a really respected M&A attorney and CPA.
- There is no such thing as handshake agreements or verbal assurances. It has to be in the APA and detailed out.
Posted on 7/2/25 at 3:26 pm to BamaAlum02
Well now you make me think it isn't truly 1.5 million. 
Talking to them in a little bit for a follow up. I can update. Appreciate the interest and responses.
Talking to them in a little bit for a follow up. I can update. Appreciate the interest and responses.
Posted on 7/2/25 at 6:24 pm to Drizzt
Sell, sell, sell
Signed Mortimer Duke
Signed Mortimer Duke
Posted on 7/2/25 at 7:39 pm to Saint5446
quote:So I've been a part of a deal like this a few years back, albeit at a larger scale.
Should I sell my medical practice?
The offer as it's presented here sounds reasonable. Normally medical buyouts come in at 6-8x EBITA.
The main issues, if you don't sell, are resiliencies to competition and (perhaps) local exclusive contracts, anticipation of your corporate growth and associated risks, and estimated personal earnings based on anticipated growth.
If you do sell, how are you going to relate to loss of control (don't under estimate this), tax and investment ramifications associated with your buyout (post-tax money and expected ROI for it), your future potential administrative opportunities (outside of your own practice) with the buyer, and fall back opportunities if you decide to cut and run at some point in the future.
Run the numbers, and make your decision. Good luck, and congrats on putting yourself in that position.
Posted on 7/2/25 at 8:01 pm to BamaAlum02
quote:Excellent post.
- Contact a CPA and attorney that understands M&A ASAP.
- Do not sign the LOI until the attorney looks at it. If it is not in the LOI, it will not be in the purchase agreement.
- You debt will either be paid by the proceeds or will be adjusted in NWC (net working capital).
- The NWC target will be a point of negotiation. If you have excess it will increase the purchase price, if you have a deficiency they will reduce it off the top at closing. You should have a good feel for 45-90 days of NWC as that is the range they will expect. Since you said cash flow can be tricky because of insurance, I would anticipate they will want closer to 90.
- This will have components of both ordinary income and capital gains for you. It will either be structed as an asset purchase (most likely since they don't want your past issues) or will be a stock purchase with a 338(h)(10) election to treat it as an asset purchase for tax purposes. What the IRS calls "hot assets" will be treated as ordinary income (AR, depreciation recapture).
- The LOI is the best deal you will get and will only be negotiated down during the APA.
- I always tell clients to assume you not receive any of the earnouts or contingent bonuses when evaluating the deal. You are not in control anymore so take those off the table.
- Do not skimp on professional services. Hire a really respected M&A attorney and CPA.
- There is no such thing as handshake agreements or verbal assurances. It has to be in the APA and detailed out.
The legal aspects I took for granted were addressed. Maybe not though. The OP absolutely should contract high end legal advisors, and considering the debt equation, a CPA as well (presumably those relationships are intact relative to his practice).
Re: "There is no such thing as handshake agreements or verbal assurances. It has to be in the APA and detailed out."
Every contract will have a four corners clause that stipulates if an agreement is not expressed in writing within the contract, it does not exist. I got burned with this in my first contract despite a lawyer reviewing it.
Posted on 7/2/25 at 9:08 pm to NC_Tigah
Update. Spoke to them today. Expressed concerns about them acquiring my AR but not my debt, but didnt overtly ask for a specific number. Discussion was more about what employment would be like. TBH it sounds good and fairly autonomous. The job actually sounds interesting in that I would also be opening new offices De Novo.
Guy I’ve been dealing with primarily said “I hear you loud and clear. At the risk of negotiating against myself, I may have a little wiggle room and I’ll take it back to the investment team.”
Going to get me an update by Monday. I figured it may be better to leave things vague and see what else they’ll offer, then maybe ask for a little extra or get more specific at the end to get it over the finish line after they come back.
Great advice in this thread.
Guy I’ve been dealing with primarily said “I hear you loud and clear. At the risk of negotiating against myself, I may have a little wiggle room and I’ll take it back to the investment team.”
Going to get me an update by Monday. I figured it may be better to leave things vague and see what else they’ll offer, then maybe ask for a little extra or get more specific at the end to get it over the finish line after they come back.
Great advice in this thread.
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