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What Happens When Your Practice Is Purchased By a Private Equity Company?

by Ron Lebow
Practice Path MD
November 2017

Ron Lebow's article, "What Happens When Your Practice Is Purchased By a Private Equity Company?," was published in the November/December 2017 issue of Practice Path MD.

From the article . . .

Generally, you can expect to get a purchase price based on a multiple of EBITDA (Earnings before interest, tax, depreciation and amortization). A savvy seller will pursue opportunities to participate in additional upside following sale. Most venture capitalists and private equity investors are buying with the goal of ultimately flipping the business again for a short term gain. They will do this by acquiring additional like businesses, merging them, and selling again. A seller wants to try to, first and foremost, get a good value for her assets, with as much payable up-front. The investor, ideally, will want to keep the physician on board to continue to run the location(s) in which she currently operates, and generate income for the acquirer and their investors through fees payable by the acquired practice to companies affiliated with or owned by the purchaser, such as franchisor entities or management companies now serving the practice and other acquired practices.

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