For physician-owners of Bariatric and Obesity practices in Chicago, the decision to sell is one of the most significant of your career. This guide provides a clear overview of the current market, valuation principles, and the key steps involved in a successful transition.
Executive Summary
The Chicago market for bariatric and obesity services is expanding, driven by strong patient demand. However, the landscape is shifting with the rise of GLP-1 medications. This creates both a significant opportunity for well-positioned practices and a clear need for a strategic approach. Understanding how to frame your practice’s value in this evolving environment is critical to achieving a premium outcome. This article outlines the key factors you need to consider.
Market Overview
The demand for weight management solutions has never been stronger. The U.S. weight loss market hit $90 billion in 2023, while the specific market for bariatric surgeries is projected to grow from $2.5 billion to nearly $6.8 billion by 2033. With obesity affecting around 40% of adults, the patient base in a major metropolitan area like Chicago is substantial and growing. However, this growth is accompanied by change. The rapid adoption of GLP-1 medications is shifting patient pathways, creating a new dynamic that successful practices must adapt to. Buyers are looking for practices that have a clear strategy to thrive in this evolving ecosystem, whether by integrating medical weight loss or by emphasizing the proven long-term outcomes of surgery.
Key Considerations for Chicago Sellers
Selling a medical practice in Illinois involves more than finding a buyer. It requires navigating specific state regulations and market dynamics. For a Chicago bariatric practice, the most important factors are:
Navigating Illinois Regulations
State laws like the Illinois Medical Practice Act and the Corporate Practice of Medicine (CPOM) doctrine dictate who can own a medical practice. These rules affect how a deal must be structured, especially with private equity or corporate buyers. Proving full compliance is a non-negotiable part of due diligence.
Positioning Your Practice
How does your practice coexist with GLP-1s? Buyers want to see a clear answer. This could be a hybrid model incorporating medical weight loss or a focus on complex surgical cases where medication is not the primary solution. Your ability to tell this story is key.
Your Referral Network
In a competitive market like Chicago, your established referral relationships with primary care physicians and other specialists are a tangible asset. Quantifying the strength and history of this network can directly increase your practice’s valuation.
Market Activity
You will not find many, if any, bariatric practice sales announced in the news. These transactions happen confidentially. However, the M&A market in Chicago is active. We are seeing continued interest from several buyer types. Private equity groups are seeking to build regional platforms. Hospital systems are looking to expand their service lines, and large multi-specialty groups see bariatrics as a valuable addition. These strategic buyers are not looking for potential. They are looking for well-run practices with a history of profitability, efficient operations, and a clear growth story. The window of opportunity to attract these premium buyers is open, but it requires being prepared before they knock on your door.
The Sale Process
A successful sale is not an event. It is a structured process designed to protect you and maximize your outcome. While every transaction is unique, the core phases remain consistent.
- Preparation and Valuation. This is the foundation. We work with you to analyze your financials, normalize your earnings, and determine a realistic valuation range. This is also when we prepare the materials that tell your practice’s story to potential buyers.
- Confidential Marketing. Your practice is never publicly listed. We run a discreet process, contacting a curated list of qualified buyers who have been vetted and signed non-disclosure agreements. This creates competitive tension to drive up value.
- Navigating Due Diligence. This is the most intensive phase, where the buyer scrutinizes every aspect of your practice, from financials and contracts to compliance. Proper preparation here prevents deals from falling apart.
- Negotiation and Closing. We manage the final negotiations on the purchase agreement, helping you understand the trade-offs between cash at close, equity rollover, and other terms to secure the best possible deal structure.
How Your Practice is Valued
Buyers do not value your practice based on revenue. They value it based on its sustainable cash flow, or Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure starts with your net income and adds back owner-specific expenses like an above-market salary, personal vehicle costs, or other discretionary spending. This process of “normalizing” earnings reveals the true profitability of the business to a new owner. This Adjusted EBITDA is then multiplied by a figure (the multiple) that reflects your practice’s risk and growth profile. Factors like having multiple providers, a strong position against market shifts, and documented growth trends can command a higher multiple. Most owners are surprised to learn their practice is worth significantly more than they thought once their financials are properly prepared.
Post-Sale Considerations
The day you close the deal is not the end of the journey. The decisions you make during the sale process will define your financial future and your legacy. Planning for these outcomes from the beginning is critical.
| Consideration | Why It Matters for You |
|---|---|
| Tax Structure | An Asset Sale vs. an Entity Sale can have vastly different tax implications, directly impacting your net proceeds. |
| Staff Transition | A well-managed plan ensures continuity of care, protects your team’s morale, and is a key concern for any quality buyer. |
| Your Future Role | Your involvement can range from a clean break to staying on as a clinical leader or rolling equity for a second payout later. |
| Legacy Protection | The right partner will respect and build upon the reputation and patient goodwill you have spent a career creating in Chicago. |
Thinking through these points with an advisor ensures the deal structure aligns with your personal and financial goals, not just the buyer’s.
Frequently Asked Questions
What is driving the growth of the bariatric and obesity market in Chicago?
The Chicago bariatric and obesity market is expanding due to strong patient demand driven by the high prevalence of obesity (around 40% of adults) and the overall U.S. weight loss market growth, which was $90 billion in 2023. Additionally, the bariatric surgery market is projected to grow significantly in the next decade, further supporting demand.
How do GLP-1 medications affect the sale and valuation of a bariatric practice in Chicago?
GLP-1 medications are changing patient pathways in weight management, which affects buyer expectations. Buyers want to see how a practice adapts, either by integrating medical weight loss with medications or focusing on surgical cases where medications are less effective. A clear strategy regarding GLP-1’s role is crucial for positioning the practice and achieving a premium valuation.
What legal considerations should I be aware of when selling my bariatric practice in Illinois?
Selling a medical practice in Illinois involves compliance with the Illinois Medical Practice Act and the Corporate Practice of Medicine (CPOM) doctrine. These laws dictate ownership structures and affect deal structuring, especially with private equity or corporate buyers. Ensuring full compliance and proper due diligence is mandatory.
How is the value of my bariatric practice determined?
The practice is valued based on its sustainable cash flow, specifically Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This involves normalizing earnings by adjusting net income for owner-specific expenses. The normalized EBITDA is then multiplied by a multiple that reflects risk, growth potential, and other factors such as multiple providers and market position, determining the final valuation.
What steps are involved in the process of selling my bariatric and obesity practice?
The sale process typically includes four main phases: 1) Preparation and Valuation, where financials are analyzed and marketing materials prepared; 2) Confidential Marketing, involving discreet outreach to vetted buyers to create competitive tension; 3) Navigating Due Diligence, where buyers scrutinize every aspect of the practice to avoid deal failure; and 4) Negotiation and Closing, where the purchase agreement terms are finalized to secure the best deal.