Guide to Selling a GI & Hepatology Practice in Montana

The market for GI & Hepatology practices is changing rapidly. For practice owners in Montana, national consolidation trends combined with the state’s growing, aging population create a unique window of opportunity. Selling your practice is a major decision that requires a strategic approach. This guide provides key insights into the current market, valuation drivers, and the sale process, helping you understand how to protect your legacy and maximize your outcome.

Market Overview

Selling a GI & Hepatology practice in Montana today means navigating a market shaped by powerful national and local forces. The GI specialty is a primary target for consolidation by private equity-backed groups, who are drawn to the predictable revenue streams and opportunities for growth. This interest is amplified by strong demographic tailwinds. Montana’s population is not only growing but also aging, which directly increases the demand for gastroenterology services. Furthermore, the recent recommendation to lower the colorectal cancer screening age to 45 is set to bring millions of new patients into the system. These factors create a competitive environment where well-positioned practices are highly attractive to buyers.

Key Considerations for Your Practice

While broad market trends are favorable, a buyer’s interest truly depends on the specific characteristics of your practice. Here are a few critical areas buyers scrutinize:

1. Your Ancillary Services. The most attractive GI practices are not just consultation businesses. They are platforms with multiple revenue streams. An in-house ambulatory surgery center (ASC), anesthesia, pathology, or infusion services drastically increases profitability and, therefore, valuation. Buyers see these as built-in growth engines.

2. Your Provider Base and Staff. With a projected national shortage of over 1,600 gastroenterologists by 2025, a stable, well-run practice with skilled providers and staff is a rare asset. Buyers are acquiring not just a patient panel but a functioning team that can handle the growing demand in Montana.

3. Your Hospital Relationships. Your agreements for on-call coverage and inpatient procedures are important. A clear, well-defined relationship with local hospitals is a sign of a stable, integrated practice. A messy or dependent relationship can be seen as a risk.

Market Activity

Transaction volume in the GI space, while down from its 2021 peak, remains strong for high-quality practices. We see two primary types of buyers active in the market, each with a different approach. Private equity (PE) platforms are often aggressive, offering higher upfront cash considerations. A typical PE deal involves the seller “rolling over” 20-40% of their proceeds into equity in the new, larger company, giving them a chance at a second, larger payout when that company sells years later. In contrast, hospital systems are also active acquirers, but their offers often place more emphasis on post-transaction physician compensation and employment contracts rather than a large upfront payment. Understanding the motivations and structures of these different buyers is key to finding the right fit for your personal and financial goals.

The Sale Process: From Preparation to Closing

Selling your practice is a multi-stage process that requires careful management to ensure a smooth transaction and optimal outcome. Many owners think of a sale as a single event, but it’s more like a journey with distinct phases. Running a structured process not only reduces stress but also creates competitive tension among buyers, which directly impacts your final sale price.

What Is Your Practice Really Worth?

Valuation is more than a simple formula; it is the foundation of your entire exit strategy. For GI practices, buyers focus on a key metric: Adjusted EBITDA. This stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. More importantly, it is “adjusted” to add back owner-specific personal expenses and normalize any owner compensation that is above or below market rates. This gives a true picture of the practice’s profitability. This Adjusted EBITDA figure is then multiplied by a “multiple.” That multiple is influenced by factors we’ve discussed: practice size, provider dependency, payer mix, and especially the strength of your ancillary services. A GI practice with a profitable, integrated ASC can command a significantly higher multiple than one without. Getting an accurate, professional valuation is the critical first step.

After the Sale: Planning Your Next Chapter

The final signature on a sale agreement is not the end of the journey. The decisions you make about the structure of your deal and the transition plan will impact your finances, your career, and your staff for years to come. Thinking through these issues early is critical.

Your Role After the Sale

Do you want to continue practicing? For how long? Your role post-sale is a key point of negotiation. You might become an employee of the new entity, work as an independent contractor for a set period, or negotiate a clean break. For those who want to retain a degree of control and share in the future upside, a strategic partnership involving an equity rollover can keep you at the helm clinically while a partner handles the business administration.

Protecting Your Team and Legacy

You have likely spent years building a dedicated team and a reputation in your community. A successful transition plan ensures patient care continues seamlessly and that your staff are treated fairly. This involves clear communication, defining roles in the new organization, and ensuring the buyer’s culture is a good fit. Protecting your legacy is a key part of the deal structure.

Structuring for Tax Efficiency

How your sale is structuredtypically as an asset sale or an entity salehas massive tax implications. The allocation of the purchase price to different assets like equipment versus intangible “goodwill” can mean the difference between paying lower capital gains rates versus higher ordinary income rates. This is an area where proactive planning with an experienced advisor can save you a significant amount on your tax bill.