Selling your Ortho & MSK practice is one of the most significant decisions of your career. In Cincinnati, the market is currently shaped by strong buyer demand and unprecedented consolidation, creating a unique window of opportunity for practice owners. This guide provides key insights into the market, valuation, and process to help you navigate this transition and achieve your financial goals. Proper preparation is the foundation of a successful sale.
Market Overview
The Cincinnati and broader Ohio market for Orthopedic and MSK practices is incredibly active. We are seeing a clear, sustained trend of consolidation, with private equity (PE) backed groups and large regional health systems actively seeking to acquire or partner with established, independent practices like yours. This is not a passive market. It is a dynamic environment driven by strategic buyers looking for growth.
A Seller’s Market
This high level of buyer interest creates a competitive landscape, which is excellent news for a potential seller. It means you are more likely to receive multiple offers, providing leverage to secure favorable terms and a premium valuation. Buyers are looking for well-run practices with a strong local reputation, a stable patient base, and avenues for growth.
Why Owners Are Selling Now
Physicians are exploring sales for various reasons. Some are planning for retirement, while others are motivated by a desire to reduce administrative burdens and focus solely on clinical care. Joining a larger organization can provide significant cost savings, access to superior technology, and relief from the growing complexities of running a private practice.
Key Considerations
While the market is favorable, a successful sale requires careful thought. Your practice’s goodwill, which is the value of your strong reputation and loyal patient base in the Cincinnati community, is a massive asset. Buyers pay a premium for a practice with a history of positive patient outcomes and a dedicated team.
Beyond your reputation, buyers will conduct thorough due diligence, scrutinizing your financial records, operational efficiency, and legal standing. Being prepared for this is critical. We find that owners who assemble their professional team, including an M&A advisor, accountant, and attorney, early in the process experience a much smoother transaction. This team helps you organize your financials and present your practice in the best possible light.
Market Activity
The buyers active in the Cincinnati market today are sophisticated and strategic. Understanding who they are and what they want is key to positioning your practice correctly.
- The Rise of PE Platforms. Private equity firms are building large, multi-state orthopedic platforms. They seek profitable practices to serve as a regional anchor or as a “tuck-in” acquisition to an existing platform. They bring deep business expertise and capital for growth.
- Strategic Health System Expansion. Local and regional health systems are also active, looking to expand their MSK service lines and secure their referral networks. A partnership with a health system can offer different benefits, often focused on clinical integration.
- Competitive Tension Drives Value. The presence of both these buyer types creates a competitive environment. We run processes that ensure both PE and strategic buyers are at the table, creating the tension needed to drive valuation multiples higher and secure better terms for you, the seller.
Sale Process
Thinking about the sale process can feel overwhelming, but it follows a logical path. The entire journey is designed to move from broad exploration to a specific, successful closing. It generally involves four key stages: preparation and valuation, where you understand your practices worth and get your documents in order; confidential marketing, where we identify and approach a curated list of qualified buyers; due diligence, where the buyer verifies the information about your practice; and finally, negotiation and closing, where we finalize the legal agreements. The due diligence phase is where many self-managed sales encounter trouble. Proper preparation beforehand, guided by experienced advisors, can prevent these issues and keep the deal on track.
Valuation
So, what is your Ortho & MSK practice actually worth? It is more than just a simple multiple of revenue. Sophisticated buyers value your practice based on a metric called Adjusted EBITDA, which represents your true cash flow. We calculate this by taking your net income and adding back interest, taxes, depreciation, amortization, and certain owner-specific expenses.
From there, a valuation multiple is applied. This multiple is not static. It changes based on several factors, making a professional assessment critical.
| Factor Influencing Multiple | Why It Matters |
|---|---|
| Practice Scale & EBITDA | Larger, more profitable practices are seen as less risky and get higher multiples. |
| Provider Mix | Practices less reliant on a single owner and with associate physicians command a premium. |
| Payer Mix | A healthy mix of commercial payers is often valued higher than heavy government payers. |
| Growth Potential | Clear opportunities for ancillary services or expansion increase the multiple. |
A professional valuation tells a story about your practice’s future, not just its past. Many owners are surprised to learn their practice is worth more than they thought once it is properly analyzed and presented.
Post-Sale Considerations
The transaction closing is not the end of the story. Your legacy, your staff, and your own next chapter are all critical post-sale considerations that must be planned for in advance. The structure of the deal has major implications for your future. For example, buyers may propose an earnout, where a portion of the sale price is tied to the practice’s future performance.
Another common structure is an equity rollover, where you “roll over” a percentage of your ownership into the new, larger company. While this means less cash at closing, it gives you a “second bite of the apple,” allowing you to share in the financial upside when the larger platform is eventually sold. Navigating these options is complex, but the right structure can protect your team and significantly increase your total financial return. It is about crafting a deal that aligns with your personal and financial goals.
Frequently Asked Questions
What is the current market situation for selling an Ortho & MSK practice in Cincinnati, OH?
The Cincinnati market is currently a seller’s market with strong buyer demand, especially from private equity backed groups and regional health systems, creating a competitive environment with multiple offers likely for well-run practices.
Why are Ortho & MSK practice owners in Cincinnati considering selling their practices now?
Owners are selling to plan for retirement, reduce administrative burdens, focus more on clinical care, access superior technology, and benefit from cost savings and relief from practice complexities.
What factors influence the valuation of an Ortho & MSK practice in Cincinnati?
Valuation is based on Adjusted EBITDA and influenced by practice scale and profitability, provider mix, payer mix, and growth potential. Larger practices with diverse providers, strong commercial payers, and expansion opportunities receive higher multiples.
What is the typical process for selling an Ortho & MSK practice in Cincinnati?
The sale process includes four stages: Preparation and valuation, confidential marketing to qualified buyers, due diligence for buyer verification, and negotiation and closing of legal agreements.
What post-sale considerations should sellers in Cincinnati be aware of?
Post-sale, sellers should plan for their legacy, staff, and next chapter. Deal structures like earnouts and equity rollovers affect financial outcomes and require careful planning to align with personal and financial goals.
