Florida’s unique market presents a significant opportunity for dermatology practice owners considering a sale. High demand, driven by a growing and aging population with significant sun exposure, has attracted strong interest from buyers, particularly private equity. Navigating this landscape requires careful preparation and strategic thinking to ensure you realize the full value of your life’s work. This guide provides a direct overview of the factors you need to consider.
Market Overview: A Seller’s Climate
The current environment for selling a dermatology practice in Florida is strong. Two main factors create this favorable climate. Your practice is sitting at the intersection of high demand and limited supply, which increases its value to strategic buyers looking to expand in the state.
A Growing Patient Base
Florida’s population is booming, with projections showing more than 300,000 new residents each year. A large portion of this population, about 40%, is over the age of 50. This demographic, combined with the sunny climate, leads to a continuous and growing need for dermatological services. For a practice owner, this means your patient demand is not only stable, it’s likely to increase.
A Fragmented Landscape
The dermatology field is still largely made up of smaller, independent groups. About one-third of practices are run by solo practitioners. This fragmentation makes the market very attractive to larger groups and private equity firms who are looking to build a larger presence in a region by acquiring established, successful practices like yours.
Key Considerations Before You Sell
Even in a hot market, you should not feel pressured to sell. A well-managed practice will always be an attractive asset. The decision to sell is a personal one, and maintaining your independence is a perfectly valid choice. If you are exploring a sale, the most important step is early preparation. We find that owners who begin planning two to three years ahead of a potential sale achieve the best outcomes. This gives you time to get your financials in order, make small operational changes that significantly boost value, and ensure all practice owners are aligned on the goal. This thoughtful preparation puts you in control of the process.
Market Activity: Understanding the Buyers
The demand for Florida dermatology practices is not just theoretical. It is driving real market activity that you should be aware of. Private equity (PE) firms are the most active buyers, but understanding their model is key to finding the right partner.
Here are three key trends to watch:
- Private Equity is Leading the Charge. PE firms are actively acquiring practices across Florida. In fact, Florida has one of the higher rates of PE affiliation in the country. They are often well-capitalized and can move quickly.
- Buyer Diligence is Thorough. These are sophisticated buyers. They will look deeply into your financials, clinical data, and operations. Being prepared for this scrutiny is not just helpful, it can prevent your deal from falling apart.
- Not All Partners Are Equal. PE ownership can sometimes lead to concerns about a shift in focus from patient care to profits. It is important to do your own research on a potential buyer. You need to find a partner whose vision for the future aligns with yours and who respects your legacy.
The Sale Process in Brief
Selling your practice is a structured journey. It typically begins with a confidential valuation and the preparation of marketing materials that frame the story of your practice’s success. From there, you would move to confidentially approaching a curated list of potential buyers to create a competitive environment. This is important, as having multiple offers is the best way to improve the price and terms of the deal. Once you select a preferred buyer, you will negotiate a Letter of Intent (LOI). This is a critical document that outlines the main deal terms, so you should not sign one without review from your legal and M&A advisors. The final stage is an extensive due diligence period before the transaction closes.
How Your Practice is Valued
Valuation is more than just a simple formula. It is a detailed process to determine what a sophisticated buyer would be willing to pay for your practice in today’s market. The cornerstone metric is Adjusted EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This figure is “adjusted” to normalize your earnings, adding back one-time costs or personal owner expenses. This true cash flow number is then multiplied by a market-based “multiple.” The multiple is not a fixed number. It changes based on several factors.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Practice Scale | Under $1M in EBITDA | Over $3M in EBITDA |
| Provider Base | Dependent on a single owner | Multiple associate providers |
| Service Mix | General dermatology only | Strong cosmetic/ancillary revenue |
| Growth Profile | Stable, mature practice | Multiple locations, clear growth plan |
Getting this calculation right is the foundation of a successful sale. Owners who try to value their own practice often underestimate its worth because they don’t know how to properly calculate Adjusted EBITDA or what multiples the market will support.
Thinking About Life After the Sale
The transaction is not the end of the story. You need a clear plan for what comes next, both for you and your staff. The terms of your employment agreement, including your compensation, responsibilities, and schedule, will be a key part of the deal negotiation. Many owners also choose to “roll over” a portion of their sale proceeds into equity in the new, larger company. This gives you a stake in the future success and the potential for a “second bite of the apple” when that larger company is sold years later. Protecting your staff and your legacy requires finding a buyer who will be a good steward of what you have built. These are not afterthoughts. They should be central to your strategy from the very beginning.
Frequently Asked Questions
What makes Florida a strong market for selling a dermatology practice?
Florida has a growing and aging population with significant sun exposure, creating high demand for dermatological services. The market is fragmented with many solo practitioners, attracting strategic buyers like private equity firms looking to expand.
How far in advance should I prepare my dermatology practice for sale in Florida?
It is recommended to begin planning two to three years ahead of a potential sale. Early preparation helps get financials in order, make operational improvements, and align all practice owners to maximize the value and control of the sale process.
Who are the typical buyers for dermatology practices in Florida, and what should sellers know about them?
Private equity firms are the most active buyers in Florida, known for being well-capitalized and moving quickly. Sellers should be prepared for thorough due diligence on financials, clinical data, and operations and should research buyers carefully to ensure aligned vision and respect for their practice’s legacy.
How is the valuation of a dermatology practice determined when selling in Florida?
Valuation centers on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) adjusted to reflect true cash flow. This figure is multiplied by a market-based multiple, which varies based on practice scale, provider base, service mix, and growth prospects. Correct valuation requires expertise to accurately calculate and apply market multiples.
What should I consider about life after selling my dermatology practice in Florida?
It’s important to have a clear post-sale plan for yourself and your staff, including employment agreement terms like compensation, responsibilities, and schedule. Many sellers ‘roll over’ some proceeds into equity in the new company, gaining a stake in future growth. Choosing a buyer who will protect your staff and legacy is crucial and should be part of your early exit strategy.