The market for dermatology practices is active, and Maryland is no exception. For practice owners, this presents a significant opportunity. Selling your life’s work is a major decision that involves more than just finding a buyer. Successfully navigating the sale requires careful preparation, strategic timing, and a deep understanding of what buyers are looking for. This guide will walk you through the key aspects of selling your Maryland dermatology practice in the current environment.
Market Overview
If you’re a dermatology practice owner in Maryland, you’re in a strong position. The landscape is shaped by positive economic trends and active buyers looking for strategic growth opportunities. National economic resilience and healthy consumer spending provide a stable foundation, making both medical and aesthetic services attractive to investors.
Strategic Growth in Maryland
We see this trend playing out locally. The acquisition of Maryland Dermatology Associates by a larger group, Anne Arundel Dermatology, is a prime example. This move shows that well-run practices in desirable Maryland locations are prime targets for larger platforms looking to expand their footprint. These buyers are sophisticated and looking for specific opportunities.
A Favorable Economic Climate
Overall economic indicators are positive for healthcare providers. Wage growth has largely kept pace with inflation, meaning patients are more likely to have disposable income for both necessary medical procedures and elective cosmetic treatments. This dual-stream revenue potential makes dermatology practices particularly appealing to buyers right now.
Key Considerations
A strong market is only half the equation. The success of your sale hinges on preparation. Buyers will conduct deep due diligence, and you need to be ready. This means having pristine financial records that can withstand scrutiny. It also means ensuring you are fully compliant with all regulations, from lab operations to how you classify independent contractors. Trying to hide an issue is a sure way to lower your price or kill the deal entirely. Assembling a team of advisors who specialize in healthcare M&A early in the process is not a luxury. It is a core part of managing the sale, generating a competitive environment among buyers, and ultimately achieving the best outcome.
Market Activity
The data on dermatology M&A confirms the strength of the market. Activity has been growing steadily, showing sustained interest from both financial sponsors and strategic buyers. Here is what the trends tell us:
- Deal Volume is Increasing. The number of transactions has climbed year over year, from 54 deals in 2021 to 77 in 2023. This shows a consistent and growing appetite for dermatology practices.
- Aesthetics are a Major Driver. In the last year, deals involving aesthetic dermatology made up about two-thirds of all transactions. Practices with a strong cosmetic revenue stream are in high demand.
- Add-On Acquisitions Dominate. Nearly three-quarters of all deals were “add-on” acquisitions, where a larger platform or private equity-backed group acquires a smaller practice to integrate into their network. This is the most common path to an exit for independent owners in Maryland.
The Sale Process
Understanding the steps of a sale can make the entire experience feel more manageable. It generally begins long before your practice is on the market, with deep preparation of your financials and operations. Once you are ready, the next step is to create a confidential marketing process that presents your practice to a curated list of qualified buyers. This is how you create competitive tension to maximize value. After initial offers are received, you enter the due diligence phase. This is a critical hurdle where a buyer examines every aspect of your business. Successfully navigating this stage leads to final negotiations and, ultimately, the closing of the transaction. Each step has its own challenges, and having a guide to manage the timeline and momentum is key to reaching the finish line.
How Your Practice is Valued
One of the first questions every owner asks is, “What is my practice worth?” In today’s market, the answer usually starts with a metric called Adjusted EBITDA. This is your practice’s Earnings Before Interest, Taxes, Depreciation, and Amortization, but “adjusted” to normalize for owner-specific expenses and one-time costs. It represents the true cash flow of the business.
This Adjusted EBITDA figure is then multiplied by a number (the “multiple”) to determine the enterprise value. That multiple is not random. It is heavily influenced by your practice’s specific characteristics. A higher multiple means a higher valuation. We find that many owners are sitting on more value than they realize until their financials are properly framed.
| Value Driver | Lower Multiple | Higher Multiple |
|---|---|---|
| Provider Base | Dependent on a single owner | Multiple associate-driven providers |
| Revenue Mix | 100% medical dermatology | Balanced mix of medical & cosmetic |
| Location | Single site in a saturated area | Multiple sites in attractive MD markets |
| Profitability | Under $500K in EBITDA | Over $1M+ in EBITDA |
Post-Sale Considerations
The transaction does not end when the papers are signed. A successful sale also involves planning for what comes next. You need to consider your own role post-sale. Most deals with larger groups require the selling physician to continue working for a period, often 3 to 5 years, under an employment agreement. You also need to think about your staff and your legacy. Finding a buyer who aligns with your values, will treat your team well, and respects the brand you have built is critical. If you own your building, you have another decision to make: sell the real estate with the practice or create a lease for a long-term income stream. These are not afterthoughts. They are key deal points that should be negotiated upfront to protect your financial future and your peace of mind.
Frequently Asked Questions
What is the current market trend for selling dermatology practices in Maryland?
The market for dermatology practices in Maryland is active and growing, with increasing deal volume and strong buyer interest, especially from larger groups looking to expand strategically.
How is the value of a Maryland dermatology practice determined?
Valuation typically starts with Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization, adjusted for owner-specific expenses and one-time costs). This figure is multiplied by a multiple influenced by factors like provider base, revenue mix, location, and profitability to determine the enterprise value.
What are key preparation steps before selling my dermatology practice in Maryland?
Key preparations include having pristine financial records, ensuring full regulatory compliance, assembling a team of healthcare M&A advisors early, and preparing your practice for due diligence to withstand buyer scrutiny.
What does the typical sale process look like for a dermatology practice in Maryland?
The sale process involves long-term preparation, confidential marketing to qualified buyers, creating competitive tension to maximize value, navigating due diligence, final negotiations, and closing the transaction, all managed carefully to maintain momentum.
What post-sale considerations should I be aware of after selling my Maryland dermatology practice?
Post-sale considerations include planning your role under a potential employment agreement (often 3-5 years), staff and legacy concerns, and decisions about your practice’s real estate, whether to sell it or lease it for ongoing income.