The market for selling an oncology practice in South Carolina is more active than ever. With significant investment from private equity and large strategic partners, the landscape is changing quickly. For practice owners, this presents a unique window of opportunity. This guide provides a clear overview of the market, key considerations for a successful sale, and how to understand your practice’s true value. Navigating this process requires careful planning and a deep understanding of market dynamics.
Market Overview
If you are an oncology practice owner in South Carolina, you are operating in a seller’s market. The demand for well-run oncology practices is strong, driven by two main forces.
Private Equity Interest
Private equity firms see immense value in the oncology space. This is not just about the practice itself. In a notable February 2023 transaction, the building housing South Carolina Oncology Associates in Columbia was sold to private equity for $48 million. This shows that investors are looking at every component of value, from operations to real estate. They bring capital and business expertise, but they require a high level of financial reporting and operational efficiency from the practices they acquire.
Strategic Consolidation
Large, national oncology groups are also actively expanding their footprint in the state. OneOncology, for example, has been a major player, recently acquiring radiation oncology centers in Myrtle Beach and Conway. Their partnerships have added numerous physicians and providers to their South Carolina network. This trend toward consolidation means independent practices have an opportunity to join larger platforms, gaining resources and scale. However, it also means the buyers are experienced and know exactly what they are looking for.
Key Considerations for South Carolina Owners
Selling your practice is a major financial and personal decision. The market is favorable, but a successful outcome depends on more than just timing. You need to prepare. Here are three critical factors to consider early in the process.
- Your Legacy and Future Role. What do you want your role to be after the sale? Some owners want to retire completely. Others want to continue practicing with less administrative burden. The right buyer will align with your goals. We find that structuring a deal to preserve clinical autonomy is a top priority for most physicians. It is important to define what “control” means to you so we can find a partner who respects it.
- Protecting Your Team. Your staff is a huge part of your practice’s success and value. A sudden sale can create uncertainty for them. Planning for the transition includes communicating the changes clearly and working with a buyer who values your team and intends to retain them. This protects your legacy and ensures continuity of care for your patients.
- Understanding “Fair Market Value.” Your practice is not just a collection of assets. Its value is based on consistent earnings, growth potential, and strategic fit for a buyer. A sale must be at “Fair Market Value,” but this is not a single, universally agreed-upon number. It requires a detailed analysis.
Market Activity and Buyer Landscape
The data confirms the trend. According to industry tracking by Provident Healthcare Partners, oncology M&A remains very active, with 12 deals closed nationwide in the first half of 2024 alone. South Carolina is a focal point of this activity. We saw this when OneOncology acquired two local radiation oncology centers from GenesisCare following its bankruptcy. This shows that even distressed assets are attractive to well-capitalized buyers.
Understanding who these buyers are is key to positioning your practice.
| Buyer Type | What They Look For | Typical Goal |
|---|---|---|
| Private Equity | Practices with strong, stable earnings (EBITDA), multiple providers, and growth potential. | To professionalize operations, grow the practice, and sell it for a higher multiple in 3-7 years. |
| Strategic Networks | Practices that expand their geographic footprint or add new service lines (e.g., radiation). | To achieve economies of scale, increase negotiating power with payors, and consolidate market share. |
| Local Hospitals | Practices that can secure a referral base and integrate into their health system. | To build an integrated cancer care service line and keep patients within their system. |
The Practice Sale Process
A successful practice sale is not an event. It is a process. Many owners think about selling only when they are ready to exit, but the highest valuations are a result of preparation that starts years in advance. In fact, if you plan to sell in the next two to three years, the preparation should begin now. Here is a simplified look at the path.
- Preparation and Positioning. This is the most important phase. It involves getting your financial and operational house in order. We work with owners to clean up financial statements, optimize billing, and create a compelling growth story that buyers will pay a premium for.
- Professional Valuation. An independent, expert valuation is the foundation of your entire strategy. It sets a realistic price expectation and becomes the baseline for negotiations.
- Confidential Marketing. Your practice is not “listed for sale.” A proper process involves confidentially approaching a curated list of qualified buyers who have been vetted to match your goals. This creates competitive tension to drive up the price.
- Due Diligence. This is where the buyer examines everything about your practice, from financial records to provider contracts and compliance. Being prepared for this stage is critical. It is where many deals fall apart due to unexpected issues.
- Negotiation and Closing. The final stage involves negotiating the definitive agreements and closing the transaction. An experienced advisor ensures the legal and financial terms protect your interests long after the deal is done.
Understanding Your Practice’s Valuation
Many practice owners mistakenly believe their practice’s value is tied to revenue or the number on their tax return. Sophisticated buyers, however, look at value through a different lens. They focus on profitability and future cash flow.
The Key Metric: Adjusted EBITDA
The starting point for any serious valuation is Adjusted EBITDA. This stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. More importantly, it “adjusts” your reported profit by adding back owner-specific or one-time expenses. For example, if you run a car lease through the business or pay yourself a salary that is above the market rate for a clinical provider, those amounts are added back to your profit. This gives a truer picture of the cash flow the business generates. We often find that a practice’s Adjusted EBITDA is significantly higher than its net income, revealing hidden value.
What Drives Your Multiple
Once Adjusted EBITDA is established, it is multiplied by a number called a “multiple” to get your practice’s Enterprise Value. This multiple is not arbitrary. It is influenced by several factors:
* Scale: Practices with higher EBITDA command higher multiples.
* Provider Mix: A practice that relies less on a single owner is less risky and more valuable.
* Growth: A track record of consistent growth is highly attractive.
* Payer Mix: A healthy mix of government and commercial payors indicates stability.
Post-Sale Considerations
The day you close the sale is not the end of the story. Many modern deals, especially with private equity, involve structures that keep you invested in the practice’s future success. Understanding these is critical to maximizing your total return.
- The Earnout. An earnout is a portion of the sale price that is paid out over the next one to three years, contingent on the practice hitting certain performance targets (like revenue or EBITDA). This is a way for a buyer to ensure a smooth transition and verify the practice’s performance post-sale. It is important that these targets are negotiated to be realistic and achievable.
- The Equity Rollover. Many buyers will ask you to “roll over” a portion of your sale proceeds into equity in the new, larger company. This means you retain a minority ownership stake, typically 10-30%. While this reduces your cash at close, it gives you a “second bite at the apple.” When the larger platform is eventually sold again, your rollover equity could be worth significantly more, providing a second major payday. This is how many physicians create true generational wealth.
Planning for these post-sale realities is just as important as negotiating the initial price. It changes the nature of the sale from an exit to a strategic partnership.
Not sure if selling is right for you?
Frequently Asked Questions
What is driving the demand for oncology practices in South Carolina?
The demand for oncology practices in South Carolina is driven primarily by significant investment from private equity firms and strategic consolidation by large national oncology groups. Private equity is interested in the value of the practice operations and real estate, while strategic buyers aim to expand their geographic footprint and service lines.
What should oncology practice owners consider about their role after selling their practice in South Carolina?
Owners need to decide what their post-sale role will be. Some may choose to retire completely, while others want to continue practicing with less administrative burden. Structuring the deal to preserve clinical autonomy and aligning with a buyer who respects the owner’s definition of control is crucial.
How is the value of an oncology practice in South Carolina determined?
Value is based on adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) which reflects true cash flow by adding back owner-specific or one-time expenses. The adjusted EBITDA is then multiplied by a multiple influenced by factors like practice scale, provider mix, consistent growth, and payer mix to arrive at the enterprise value.
What is the typical process for selling an oncology practice in South Carolina?
The process includes five main steps: 1) Preparation and positioning to optimize financials and growth story. 2) Professional valuation to set price expectations. 3) Confidential marketing to vetted buyers. 4) Due diligence where buyers review all aspects of the practice. 5) Negotiation and closing with experienced advisors to protect interests.
What post-sale structures should sellers expect when selling to private equity in South Carolina?
Sellers should be aware of earnouts, which are contingent payments over time based on performance targets, and equity rollovers, where sellers reinvest a portion of proceeds into the new company to retain minority ownership. These structures can provide additional financial upside and transform a sale from an exit into a strategic partnership.