Determining your orthopedic practice’s true value is more complex than plugging numbers into a formula. While online calculators and industry rules-of-thumb offer a starting point, they rarely capture the full story a serious buyer needs to see.

Sophisticated buyers, especially from the private equity community, look deeper. They analyze the quality of your cash flow, the stability of your operations, and the strategic potential for growth. At SovDoc, we view valuation through that same lens. We don’t just ask what your practice is worth today. We build a financial story that demonstrates what it can be worth tomorrow.

This guide will walk you through the core components of a private-equity-grade valuation. You will learn to identify the key drivers that attract premium offers and see your practice as a top-tier an investor would.

The Foundation of Your Valuation: Adjusted EBITDA

The most important figure in your practice’s valuation is its Adjusted EBITDA. This number represents your Earnings Before Interest, Taxes, Depreciation, and Amortization, but it is “adjusted” to show the practice’s true, repeatable profit. You can think of it as the cash flow a new owner can expect to generate before they apply their own financing and tax structures.

A buyer needs an accurate picture of your practice’s profitability, separate from financial results that are unique to your ownership. This process is called normalization. We normalize your earnings by adding back any personal expenses you run through the business and adjusting your owner’s salary to a fair market rate. You can find more detail in our guide to EBITDA for physicians and the complete EBITDA Normalization Guide.

Let’s walk through a clear example. We’ll use a two-surgeon orthopedic group that also has an in-house physical therapy unit.

Metric	Amount	Notes
Reported Net Income	$900,000	This is the “bottom line” from your Profit & Loss statement.
Add Owner Salaries (Above-Market)	$400,000	We add back $200,000 for each founder whose pay is above the market rate for an employed surgeon.
Add One-Time Legal Fees	$50,000	These fees were for a specific lawsuit last year and are not an ongoing business expense.
Add Personal Auto & Travel	$35,000	These are personal expenses you ran through the practice that a new owner would not incur.
Adjusted EBITDA	$1,385,000	This is the number a buyer will use to determine your practice’s value.

You can see how this normalization process presents a more accurate and powerful financial picture. Calculating your Adjusted EBITDA correctly is the foundational step in the valuation process. It provides the core number that, when combined with a valuation multiple, determines the potential price for your practice.

What Buyers Are Paying for Orthopedic Practices

After you calculate your practice’s Adjusted EBITDA, you apply a valuation multiple to determine its market value. This number shows what buyers are willing to pay for every dollar of your earnings. It reflects market demand, your practice’s risk profile, and its potential for future growth.

Our research into recent private equity and strategic buyer transactions reveals the typical valuation ranges for orthopedic practices today.

Practice Size & Type	Typical EBITDA Multiple Range
Smaller “Tuck-In” Acquisition	Mid-Single Digits (e.g., 4.0x – 6.0x)
Midsized Independent Practice	High-Single to Low-Double Digits (e.g., 7.0x – 11.0x)
Large “Platform” Practice	Mid-Teens (e.g., 12.0x – 15.0x+)

“Medical practice valuation is an in-depth process that determines the economic value of a practice… Accurate valuation is crucial for making well-informed decisions regarding buying, selling, merging, attracting investors, or securing financing.”

These ranges provide a strong starting point, but your practice’s final multiple depends on specific value drivers. In the next section, we explain exactly which factors increase or decrease your valuation. For a broader perspective, you can also see our guide to valuation multiples by medical specialty.

Think Like a Buyer: What Determines Your Valuation Multiple?

Your practice’s final valuation isn’t just a reflection of its past performance. Sophisticated buyers are assessing its future potential. To get the best multiple, you need to see your practice through their eyes. They are looking for specific strengths that reduce their risk and create a clear path for growth.

Here are the four areas that directly influence how a buyer will value your orthopedic practice.

1. Your Integrated Ancillary Services

Practices with built-in service lines are more valuable because they are more self-sufficient and defensible. When you offer these services in-house, you show a buyer a complete business model, not just a collection of physician schedules.

A buyer will pay a premium when you can demonstrate strong performance in areas like:

• Physical and Occupational Therapy: Capturing the entire rehabilitative care cycle for your patients.
• Ambulatory Surgery Center (ASC): An ASC is a high-margin asset that transforms your practice into a powerful surgical platform.
• Imaging Services: In-house MRI, X-ray, and ultrasound provide both convenience and a consistent, high-margin revenue stream.

2. Your Geographic Footprint and Market Density

A single-location practice, no matter how successful, presents more risk to a buyer than a multi-location group. Scale and geography are powerful indicators of stability and opportunity.

Buyers look for:

• Multiple Locations: More offices across a desirable area create a wider patient-referral network and insulate the business from local competition.
• Platform Potential: Private equity and strategic buyers want a platform they can build on. A strong presence in a growing metropolitan area signals that your practice is that platform.
• Favorable Demographics: Operating in a market with a growing or aging population provides a built-in tailwind for future success.

3. The Depth of Your Team and Operational Efficiency

If your practice would collapse without you, its value is limited. A buyer isn’t acquiring a job; they are acquiring a business that can run successfully after a transition.

Your value increases when you have:

• A Deep Bench of Providers: A team with multiple skilled surgeons, physician assistants, and therapists proves your practice has long-term stability beyond any one individual.
• Efficient Systems: Buyers scrutinize your operations. A modern EMR, streamlined patient scheduling, and a well-managed payor mix are signs of a healthy, scalable business. They see this as a machine they can tune for even greater performance.

4. Your Clear and Compelling Growth Story

Buyers invest in the future. To get a premium multiple, you must present a credible story about where your practice is headed. A history of success is expected; a clear plan for future growth is what gets them excited.

You need to answer the question, “What’s next?” with a strategic plan that might include:

• Opening new locations in underserved areas.
• Recruiting additional surgeons to expand capacity.
• Adding new, profitable ancillary service lines.

This is where a good advisory team earns its keep. We help you build and frame this narrative with supporting data, presenting your practice’s potential in a way that sophisticated buyers understand and value. You can find more ideas in our guide on practice value enhancement strategies.

What You Actually Take Home: Calculating Your Net Proceeds

Your practice’s valuation, or Enterprise Value, is the exciting headline number. But it is not the final amount you will deposit in your bank account. To find your actual take-home pay, you need to subtract a few key items. This is where a well-structured deal, guided by an expert, can significantly protect your final payout.

Here is the simple formula to get from the valuation to your net proceeds.

Enterprise Value (Adjusted EBITDA x Multiple)


Less: Any outstanding debt (like equipment loans or lines of credit)


Less: Transaction fees (your advisory and legal costs)


Plus or Minus: A working capital adjustment

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Equals: Your Estimated Net Proceeds

How Earnouts and Rollover Equity Affect Your Payout

A buyer will often structure the deal so that a portion of your payment comes later. This usually happens in two ways, an earnout or a rollover. While buyers use these to align your interests with the new company’s success, they can also be a great opportunity for you.

• Earnout: This is a future payment you receive if your practice meets specific performance goals, like revenue or profit targets, in the years following the sale. You are betting on your practice’s continued success, and you get paid more when it performs well.

• Rollover Equity: This means you take a portion of your sale proceeds and reinvest them as ownership (equity) in the new, combined company. This gives you a “second bite at the apple.” When the larger company is sold down the road, you share in that future, potentially much larger, success.

Both earnouts and rollovers can add significant value to your sale, but the details matter. The terms must be negotiated carefully to benefit you fairly. An experienced advisor is essential here to make sure these deal structures are written in your favor, not just the buyer’s.

You’ve Built a Valuable Practice. Now, Secure Its Full Worth.

Understanding your practice’s valuation, from Adjusted EBITDA to the key drivers influencing your multiple, is the foundation for a successful sale. You’ve spent years building your practice, and our job is to translate that hard work into a transaction that fully reflects its value.

We guide you through preparing your financials for buyer scrutiny, developing a compelling growth story, and negotiating from a position of strength. A strategic process helps you secure the outcome you’ve earned. If you want to know what your orthopedic practice is worth in today’s market, we can help you find out.

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