Selling your dermatology practice is one of the most significant financial and professional decisions you will ever make. In Georgia, the current market presents a unique combination of opportunity and complexity. High demand from buyers, driven by demographic shifts and private equity interest, means valuations can be strong. However, realizing that full value requires strategic preparation and expert guidance. This guide provides a clear overview of the landscape for dermatology practice owners in Georgia.
Curious about what your practice might be worth in today’s market?
Market Overview
The market for dermatology practices in Georgia is exceptionally active. This is not a coincidence. It is the result of two key trends converging. First, nearly 40% of Georgia’s dermatologists are over the age of 55, creating a natural wave of owners looking toward retirement and transition. Second, Georgia’s rate of dermatologists per capita remains below the national average. This creates a high-demand environment for established practices like yours.
This supply and demand imbalance has attracted significant attention from buyers, ranging from other large dermatology groups to private equity firms. They see Georgia’s fragmented market, which is still dominated by solo and small practices, as a prime opportunity for growth and consolidation. For a practice owner, this means there is likely more than one potential buyer for your practice, which is an excellent position to be in.
Key Considerations for a Sale
Thinking about a sale goes beyond just the final price. Sophisticated buyers look for specific signs of a healthy, well-run practice. To prepare, you should focus on the areas that directly impact your practice’s value and attractiveness. We find the most successful transitions happen when owners have a clear understanding of these points long before a sale.
Here are three areas to begin focusing on now:
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Financial Clarity and Performance
Buyers value predictable cash flow above all else. The key metric they use is Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which reflects the true profitability of your practice. This involves “normalizing” your financials by accounting for personal expenses or above-market owner salaries. Clean, organized books that clearly show a healthy profit are your number one asset. -
Service Mix and Growth Potential
A practice with a healthy mix of medical, surgical, and cosmetic dermatology is often valued more highly. Buyers are particularly interested in the potential for growth. Showcasing opportunities to expand ancillary services, add a provider, or capture more market share in your metro Atlanta or other MSA location can significantly increase buyer interest and your final valuation. -
Physician and Staff Stability
A practice that is completely dependent on the owner is seen as a riskier investment. Buyers pay a premium for practices with a strong team of associate physicians or physician assistants who are likely to remain after the transition. A plan for retaining your key staff is not just good for morale; it’s a critical component of your practice’s long-term value.
Proper preparation before selling can significantly increase your final practice value.
Market Activity in Georgia
You do not have to look far to see that the Georgia dermatology market is in a period of dynamic change. Recent transactions show a clear trend of consolidation. We are seeing independent practices of all sizes, from solo practitioners to multi-site groups, successfully partnering with larger organizations.
For instance, deals like the one involving Peachtree Dermatology Associates and PhyNet Dermatology highlight the interest from established national platforms. Similarly, regional groups like United Derm Partners are actively acquiring practices to build their presence in the state. This activity is not limited to the practice itself. We have also seen transactions involving the sale of the real estate associated with dermatology offices, showing that buyers are looking at every component of value a practice holds. This consistent deal flow confirms that now is an opportune time for owners to explore their options.
The Sale Process
Many owners believe selling a practice is a single event, but it is a structured, multi-stage process. Understanding these steps can remove much of the uncertainty and help you feel in control. A well-managed process protects your confidentiality and creates a competitive environment to ensure you receive the best possible offer.
Phase 1: Preparation and Valuation
This is the foundational stage. It involves gathering your financial and operational documents and conducting a thorough, confidential valuation. This is where you identify your practice’s strengths and any weaknesses that can be addressed before going to market. This step answers the question, “What is my practice truly worth and why?”
Phase 2: Confidential Marketing
Once you are prepared, the next step is to identify and approach a curated list of qualified buyers. This is not about listing your practice publicly. It is a discreet process where potential buyers are vetted and required to sign non-disclosure agreements before receiving any identifying information about your practice.
Phase 3: Negotiation and Due Diligence
After receiving initial offers, you select the best partner to move forward with. This phase involves negotiating the key terms of the deal and then allowing the buyer to conduct their formal due diligence, where they verify the information you have provided. This is often the most intensive part of the process, and being prepared is key to a smooth closing.
The due diligence process is where many practice sales encounter unexpected challenges.
How Your Practice is Valued
A practice valuation is part science and part art. It is not based on revenue or a simple “rule of thumb.” The universally accepted method is to calculate your practice’s Adjusted EBITDA and apply a valuation multiple to it.
Adjusted EBITDA is your practices true operational cash flow, after adding back things like your salary (normalized to a fair market rate), personal expenses run through the business, and other one-time costs. This figure gives a buyer a clear picture of the profit they can expect to generate.
That number is then multiplied by a “multiple.” This multiple is not a fixed number; it is a range that changes based on several factors.
| Factor Affecting Valuation | Lower Multiple | Higher Multiple |
|---|---|---|
| Practice Size | <$750K in EBITDA | >$2M in EBITDA |
| Provider Model | Solo Owner-Reliant | Multi-Provider, Associate-Driven |
| Service Mix | Primarily General Dermatology | Strong Cosmetic & Ancillary Revenue |
| Growth Profile | Stable, Mature Market | Located in High-Growth MSA |
Understanding these drivers is the first step. The second is framing the story of your practice to justify the highest possible multiple. Buyers do not just buy numbers; they buy a story of future opportunity.
A comprehensive valuation is the foundation of a successful practice transition strategy.
Post-Sale Considerations
The final signature on the sale document is not the end of the journey. The decisions you make during the sale process will shape your professional and financial life for years to come. Thinking about these issues early is critical to achieving a result that aligns with all of your goals.
Your Future Role
Do you want to retire immediately, or would you prefer to continue practicing for a few more years without the headaches of management? Your desired role after the sale is a key point of negotiation. The right deal structure can offer flexibility, whether it is a straightforward exit or a new role as a clinical leader within a larger organization.
Your Team’s Transition
Your staff are a vital part of your practice’s success and legacy. A key part of any good transition plan is ensuring your team is taken care of. This often involves discussing employment agreements, maintaining a positive culture, and communicating the change in a way that provides them with security and stability.
Your Financial Outcome
The headline price of a deal is not what you put in the bank. The structure of the sale, including how much is paid in cash at close versus a potential earnout or rolled equity, has massive implications. Planning for tax efficiency is crucial to maximizing your net proceeds. A well-structured deal considers not just the valuation, but how to ensure you keep as much of it as possible.
Your legacy and staff deserve protection during the transition to new ownership.
Frequently Asked Questions
What is currently driving the high demand for dermatology practices in Georgia?
The high demand is driven by demographic trends such as nearly 40% of dermatologists being over 55 and below-average dermatologist per capita rates, along with interest from private equity and large dermatology groups seeking growth opportunities.
How is the value of a dermatology practice in Georgia typically determined?
Valuation is usually based on Adjusted EBITDA, which reflects true operational cash flow after adjustments, multiplied by a valuation multiple that depends on factors like practice size, provider model, service mix, and location growth profile.
What are key areas I should focus on to maximize the value of my dermatology practice before selling?
Focus on financial clarity and performance, maintaining a balanced service mix with growth potential, and ensuring physician and staff stability with a plan for retaining key employees.
What does the sale process of a dermatology practice in Georgia generally involve?
The process includes preparation and valuation, confidential marketing to vetted buyers, negotiation and due diligence, and finally closing, all handled to protect confidentiality and foster competitive offers.
What should I consider about my future role and team after selling my practice?
Consider whether you want to retire immediately or continue practicing in a different capacity, plan for your staff’s employment and cultural transition, and structure your financial outcome to be tax efficient and maximize net proceeds.