Guide to Selling a Oncology Practice in Kentucky

The market for oncology practices in Kentucky is active. Hospital systems and new investors are consistently looking to acquire established practices like yours. This creates a receptive but complex market for owners considering a sale. Navigating this landscape requires a clear understanding of your practice’s true value, the current acquisition trends, and a strategy for the transition. This guide provides an overview to help you start the process with confidence.

Curious about what your practice might be worth in today’s market?

The Kentucky Oncology Market Overview

If you are an independent oncology practice owner in Kentucky, you have likely felt the pressure of market changes. The national trend of consolidation is very much alive here. We see a steady pattern of mergers and acquisitions, with a reported 20.8% increase in community oncology M&A over the last decade. This shift is driven by a few key factors.

Hospitals and larger health systems continue to acquire practices to expand their service lines and secure valuable downstream revenue. At the same time, new buyers, including private equity firms, have entered the space. They are looking for well-run practices with strong growth potential. For independent owners, this means it can be harder to compete, but it also means there is a very active and interested pool of buyers if you decide the time is right to sell.

Key Considerations for a Practice Sale

Selling your practice is more than a financial transaction. It’s a major personal and professional decision. Thinking through these areas early will help you define what a successful exit looks like for you.

1. Your Financial & Tax Strategy
   The structure of your sale has significant implications for your final, after-tax proceeds. Planning ahead with an advisor can help you structure the deal in a way that aligns with your financial goals, potentially saving a considerable amount that might otherwise be lost to taxes.

2. The Future of Your Staff & Legacy
   You have spent years building not just a practice, but a team and a reputation. A key part of the sale process is finding a buyer who will be a good steward of that legacy. The right partner will value your team and your approach to patient care. This is often a critical point of negotiation.

3. Your Post-Sale Role
   What do you want to do after the sale? Some owners want to retire immediately, while others prefer to stay on for a few years with a focus on clinical work, free from administrative burdens. Defining your ideal outcome helps identify the right type of buyer and transaction structure, whether its a full sale or a strategic partnership that keeps you involved.

Your legacy and staff deserve protection during the transition to new ownership.

What Market Activity in Kentucky Shows

The M&A trends in oncology are not just national statistics. They are shaping the healthcare landscape here in Kentucky. For instance, the acquisition of the Tri-State Regional Cancer Center by UK King’s Daughters is a clear example of a major health system expanding its footprint in oncology services. This type of strategic acquisition is happening across the state.

This activity is part of a larger pattern where the top 100 oncology practices in the country now employ nearly half of all oncologists. For independent practice owners in Kentucky, this trend has two sides. It signals increasing competition, but it also confirms a strong, sustained buyer appetite. Sophisticated buyers are actively looking for practices in the region, creating a favorable seller’s market for those who are well-prepared.

Timing your practice sale correctly can be the difference between average and premium valuations.

Understanding the Sale Process

A successful practice sale follows a structured process designed to protect your confidentiality and maximize value. While every deal is unique, the journey generally follows a few key phases.

Phase 1: Preparation and Valuation

This is the most important step. It involves organizing your financial and operational documents and getting a comprehensive, professional valuation. This is also where we help owners reframe their practice story, focusing on the growth drivers that buyers look for. Starting this 2 to 3 years before you plan to sell is ideal, as it gives you time to make improvements.

Phase 2: Confidential Marketing

Once your practice is prepared, your advisor confidentially approaches a curated list of qualified buyers. We do not “list” your practice publicly. We run a controlled process to create competitive tension among hospital systems, strategic buyers, and private equity groups who are the best fit for your goals.

Phase 3: Diligence and Closing

After you select a preferred buyer, the process moves to due diligence. This is where the buyer verifies all financial, legal, and operational information. Many sales encounter problems here if the initial preparation was not thorough. With proper guidance, this phase runs smoothly, leading to the final negotiation of the purchase agreement and a successful closing.

The due diligence process is where many practice sales encounter unexpected challenges.

How Your Oncology Practice is Valued

One of the most common misconceptions is that a practice is worth a simple multiple of its annual revenue. Sophisticated buyers do not value practices that way. They focus on a metric called Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents the true, sustainable cash flow of the business.

Adjusted EBITDA is calculated by taking your reported net income and adding back owner-specific or one-time expenses. This includes things like an above-market owner salary, personal vehicle leases, or other non-recurring costs. Normalizing these expenses reveals the practice’s real profitability.

This Adjusted EBITDA is then multiplied by a specific multiple, which is determined by factors like your practice size, provider mix, growth rate, and location. This professional approach ensures you are valued based on your practice’s full potential.

Understanding your practice’s current market position is the first step toward a successful transition.

Planning for Life After the Sale

A successful transaction plan extends beyond the closing date. Thinking about your post-sale life is a critical step that influences negotiations from the very beginning. You will need a plan for managing the financial proceeds, which involves working with wealth advisors and tax professionals to preserve and grow your capital.

You must also address practice-specific liabilities, like arranging for malpractice “tail” insurance coverage. Furthermore, many modern deals include components that link you to the practice’s future success. These can include an “earnout,” where you receive additional payments if the practice hits certain performance targets, or “rollover equity,” where you retain a minority ownership stake in the new, larger entity. This gives you the chance for a “second bite at the apple” when the larger group is eventually sold. Planning for these scenarios is key to a truly successful exit.

The right exit approach depends on your personal and financial objectives.