As a dermatology practice owner in Columbus, you have built something of significant value. When the time comes to consider selling, navigating the shifting M&A landscape is key to protecting your legacy and financial future. This guide offers a look at the Columbus dermatology market, key trends, and the steps involved in optimizing your exit. Understanding your practice’s position is the first step.
Market Overview: A Shifting Landscape
The New Wave of Buyers
The market for medical practices is changing. For the first time in 2024, corporate ownership of physician practices has surpassed hospital ownership. These corporate buyers, often backed by private equity, are sophisticated and look for well-run, profitable practices. While the volume of private equity deals in dermatology has seen a recent dip nationally, these groups remain powerful players. They understand the value in the specialty. Knowing how to position your practice for this type of buyer is a new requirement for sellers seeking top value.
A Healthy, Growing Sector
Despite shifts in ownership, the outlook for the dermatology market is strong. Projections show significant growth for the sector across the U.S. This growth creates a favorable environment for practice owners in Columbus. It means there is strong underlying demand for the services you provide.
Key Considerations Before You Sell
Beyond the market trends, selling your practice is a personal and operational decision. You must consider your own future. Most corporate buyers will require you to continue working for three to five years post-sale. Negotiating the terms of your post-sale role is a critical part of the process. Equally important is planning for your team. Clear communication and a plan for staff retention are vital for a smooth transition and for preserving the practice culture you built. A poorly handled transition can damage morale and even the value of the deal. Thinking through these issues ahead of time is not just good practice. It’s fundamental to a successful outcome.
Columbus Market Activity
The Columbus area is seeing significant investment in dermatology infrastructure. This points to a vibrant and valuable local market. While these are not all practice sales, these real estate transactions show that sophisticated investors see long-term value in the region.
| Location (Near Columbus) | Transaction Type | Value / Note |
|---|---|---|
| Westerville, OH | Facility Acquisition | $7.05 Million |
| Dublin, OH | Property Sale | $2.57 Million |
| Columbus, OH | Land Purchase | Indicates future growth |
| Marble Cliff, OH | New 10-Year Lease | Shows long-term commitment |
This activity signals a strong appetite for high-quality dermatology assets in the Columbus metro. For a practice owner, this is a positive indicator of the potential value locked within your business.
Understanding the Sale Process
Selling your practice is a structured journey. It starts long before a buyer is at the table. The preparation phase involves cleaning up financials and fixing operational issues, like scheduling bottlenecks, that could lower your value. It is followed by a formal valuation. Only then does the process of confidentially marketing to potential buyers begin. Once a partner is chosen, the most intense phase is due diligence, where the buyer examines every aspect of your practice. This is where many deals encounter challenges. Proper preparation can prevent surprises that might jeopardize the sale before closing. Thinking about selling in two or three years? The time to start preparing is now.
How Your Practice is Valued
Determining what your practice is truly worth is both an art and a science. Sophisticated buyers look past simple revenue figures. They focus on profitability and future potential.
- The Key Metric: Adjusted EBITDA. Your practice value is not based on revenue. It is based on a form of profit called Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure is “adjusted” to add back owner-specific costs like a high personal salary or a car lease. This shows a buyer the true cash flow of the business.
- The Multiplier. That Adjusted EBITDA number is then multiplied by a figure that reflects your practice’s risk and growth profile. A larger, multi-provider practice will get a higher multiple than a smaller, solo practice.
- Beyond the Numbers. A professional valuation also tells a story. It highlights your stable patient base, efficient operations, and growth opportunities in the Columbus market. This narrative is what convinces a buyer to pay a premium price.
Post-Sale Considerations: The Deal After the Deal
The deal is not over when the papers are signed. The structure of your sale has significant and lasting implications. You will likely be negotiating an employment agreement to stay with the practice for several years. The structure of the sale itself has major tax implications that determine how much you actually take home. Furthermore, many deals today offer an opportunity for equity rollover, where you retain a minority stake in the new, larger company. This provides a “second bite of the apple” a chance for a second, often larger, payout when the new parent company sells years later. Planning your exit strategy around these factors is just as important as negotiating the initial price.
Frequently Asked Questions
What are the current market trends for selling a dermatology practice in Columbus, OH?
The market is shifting with corporate ownership surpassing hospital ownership for the first time in 2024, driven largely by private equity-backed corporate buyers. Although private equity deals in dermatology have dipped nationally, these buyers still play a strong role. The sector is healthy and growing, which creates strong demand for dermatology services in Columbus.
What should I consider about my role post-sale in a dermatology practice sale?
Most corporate buyers require seller physicians to continue working for three to five years post-sale. Negotiating your post-sale role terms is critical. It’s also important to plan staff retention and communicate clearly to preserve practice culture, which helps maintain morale and deal value during the transition.
How is a dermatology practice valued in Columbus?
Practice value is based on Adjusted EBITDA (a profit metric) rather than revenue. This Adjusted EBITDA is multiplied by a factor reflecting practice size, risk, and growth potential. A multi-provider practice generally commands a higher multiple than a solo practice. A professional valuation also tells a compelling story about patient stability, operations, and market growth opportunities.
What are key steps in preparing a dermatology practice for sale?
Preparation involves cleaning up financials, fixing operational issues like scheduling bottlenecks, and conducting a formal valuation before marketing confidentially to buyers. Due diligence by the buyer follows, where all aspects of the practice are rigorously examined. Proper advance preparation helps prevent surprises that could derail the sale.
What post-sale considerations should I be aware of when selling my dermatology practice?
Post-sale, you will negotiate an employment agreement and consider tax implications of the sale structure to maximize take-home proceeds. Many deals offer equity rollover options, letting you retain minority ownership for potential future payouts. Strategic exit planning around these factors is as important as negotiating the sale price.
