Guide to Selling a Dermatology Practice in Nashville, TN

Selling your dermatology practice is one of the most significant financial and personal decisions you will ever make. In Nashville, the market is extraordinarily active, driven by strong practice profitability and intense interest from private equity. This guide provides a clear overview of the current landscape, key considerations, and the path to a successful sale, helping you navigate this opportunity with confidence.

Curious about what your practice might be worth in today’s market?

Market Overview

The Nashville healthcare scene is not just growing; it is a national hub for investment. For dermatology practice owners, this creates a seller’s market where strategic buyers are actively seeking to partner with successful clinicians like you.

A Hub for Healthcare Investment

Nashville is home to a mature ecosystem of healthcare management companies and investors, including private equity firms with a specific focus on acquiring and growing dermatology practices. Their presence means there is a ready pool of well-capitalized buyers looking for quality practices. This competition among buyers can drive premium valuations for owners who are properly prepared for a sale.

The Profitability of Dermatology

Dermatology remains one of the most financially robust medical specialties. Financial data shows that well-run practices are highly profitable, with median revenues per full-time physician at $1.3 million for medical and $1.8 million for cosmetic services. With operating margins often exceeding 25%, your practice is an attractive asset to buyers seeking stable cash flow and growth potential.

Key Considerations

Beyond the numbers, a successful transition depends on finding the right partner. You have built more than a business; you have built a culture and a legacy with your staff and patients. A prospective buyer’s philosophy on patient care, staff retention, and clinical autonomy should be a primary concern. With private equity now backing 10-15% of private dermatology practices, it is important to evaluate how a partnership might shift operations. Assembling a transaction team that understands these nuances is critical to protecting what you have built.

Your legacy and staff deserve protection during the transition to new ownership.

Market Activity in Nashville

The theoretical opportunity to sell becomes real when you look at the recent deals happening right here in Tennessee. The market is not just active; it’s consolidating, and local practices are at the center of it all.

Here are a few examples of the recent activity:

1. Homegrown Giants are Active. PhyNet Dermatology, a major player managed by the Nashville-based firm Century Equity Partners, is constantly seeking expansion opportunities in its own backyard.
2. Strategic Acquirers are Entering the Market. Large dermatology platforms like Pinnacle Dermatology have recently entered the Tennessee market, making acquisitions in prime locations like Belle Meade and Murfreesboro.
3. Local Practices are in High Demand. Firmly established local groups, including Brentwood Dermatology and Cumberland Skin Surgery and Dermatology, have successfully partnered with larger management companies like QualDerm Partners to fuel their next phase of growth. The data shows that practices with just one to four physicians make up nearly 80% of all acquisitions, proving you do not need to be a massive enterprise to attract serious buyer interest.

The Sale Process

Many owners think selling is like putting a “For Sale” sign in the window. The reality is a multi-stage journey that starts long before a buyer is ever contacted. The typical path involves an initial consultation, a thorough practice valuation, a confidential marketing period to identify qualified buyers, negotiation of offers, and finally, a rigorous due diligence phase. It is this final due diligence stage where many unprepared deals encounter unexpected challenges or delays. Proper preparation and guidance can streamline the administrative burden and help you anticipate buyer questions, ensuring a smooth process from start to finish.

The due diligence process is where many practice sales encounter unexpected challenges.

Valuation: What Is Your Practice Really Worth?

Practice owners often hear “rules of thumb” for valuation, but sophisticated buyers do not use them. They start with one key metric: 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 to reflect the true, ongoing profitability.

This Adjusted EBITDA figure is then multiplied by a number (the multiple) to determine your practice’s value. That multiple is not random. It is influenced by many factors that we analyze to build a compelling case for your practice’s worth.

An independent, professional valuation is the foundation of any successful sale. It moves the conversation from guesswork to a data-driven discussion that gives you the leverage to negotiate the best possible price and terms.

A comprehensive valuation is the foundation of a successful practice transition strategy.

Post-Sale Considerations

The moment you sign the closing documents is not the end of the story. How your deal is structured has massive implications for your financial future. Key elements like earnouts (future payments tied to practice performance) and equity rollovers (retaining a minority stake in the new, larger entity) must be carefully negotiated. A rollover, for example, gives you the potential for a “second bite at the apple”1 a second, often larger, payday when the new parent company is eventually sold. Planning for these scenarios, along with the tax implications of the sale, is crucial and should begin long before you get to the closing table.

The structure of your practice sale has major implications for your after-tax proceeds.