The market for dermatology practices in South Carolina is more active than ever. A current wave of market consolidation, driven by private equity and large strategic buyers, has created a significant opportunity for practice owners. This guide provides a clear overview of the market, key buyer motivations, and the steps involved in a successful sale. Understanding these dynamics is the first step toward making an informed decision about your practice’s future.
The Current Market for Dermatology in South Carolina
The dermatology industry is experiencing a surge in acquisitions. This trend is not limited to major metropolitan hubs. South Carolina is part of a national movement where private equity (PE) firms and large dermatology groups are actively seeking to partner with or acquire successful practices. They see the fragmented market of independent practices as an opportunity to build larger, more efficient organizations.
Key Buyer Motivations
Buyers are drawn to dermatology for several clear reasons. The specialty offers a stable reimbursement environment and a growing demand for services related to skin cancer. It also includes high-margin, cash-pay procedures on the cosmetic side. Furthermore, the national physician shortage in dermatology makes established practices with a loyal patient base and skilled providers very attractive acquisition targets.
South Carolina’s Place in the Trend
The South Atlantic region, including South Carolina, is a key area for this expansion. Buyers are no longer focused only on the most populous states. They are looking for well-run practices in growing areas like yours. This means you have more potential buyers and partners to consider now than you might have had just a few years ago.
Key Considerations Before You Sell
Selling your practice is a major decision that goes beyond the final price. Many physicians worry about losing clinical autonomy or seeing a shift in the culture they worked hard to build. These are valid concerns. The key is to find a buyer who aligns with your values. You should think about what you want for your patients, your staff, and yourself after the sale. Is the potential partner physician-run? Do they have a good reputation? Answering these questions early helps ensure you find a strategic fit, not just a financial one. Preparing your financial records and operational details ahead of time is also important to making the process smooth.
Your legacy and staff deserve protection during the transition to new ownership.
Market Activity in South Carolina
The interest in South Carolina dermatology practices is not just theoretical. We are seeing real activity on the ground. Here are three trends to watch.
- National Players are Arriving. The recent acquisition of Palmetto Dermatology by Advanced Dermatology and Cosmetic Surgery (ADCS) is a perfect example. Large, national groups are actively expanding their footprint into South Carolina, looking for strong local practices to join their network.
- Growth Across the State. This activity is not confined to Charleston or Columbia. As larger groups expand, they are looking for attractive practices in multiple regions within the state to build a comprehensive presence.
- The Pace is Accelerating. With a limited number of practices available and a growing number of well-funded buyers, the competition for good practices is increasing. This competitive tension can work in a sellers favor when managed correctly.
The General Sale Process
So, what does selling a practice actually involve? The most successful sales start long before a buyer is engaged. The process begins with getting your financial and operational house in order. From there, an advisor helps create a confidential process to approach a curated list of potential buyers. This generates competitive interest and multiple offers, which gives you leverage. After selecting a preferred partner, you enter a due diligence phase where the buyer verifies your practice’s information. This step is where many deals face challenges, so being prepared is important. With the right preparation and guidance, the entire process can be completed in less than six months.
The due diligence process is where many practice sales encounter unexpected challenges.
How Your Practice is Valued
Sophisticated buyers don’t value your practice based on revenue alone. They focus on a metric called Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents the true cash flow of the business. It is calculated by taking your net income and adding back owner-specific or one-time expenses. Most practices are undervalued until their EBITDA is properly calculated.
Here’s a simple example of how we find that hidden value.
| Financial Item | Amount | Explanation |
|---|---|---|
| Reported Net Income | $500,000 | The “on-paper” profit of the practice. |
| Owner Salary (Above Market) | +$150,000 | The portion of owner’s salary above fair market rate. |
| One-Time Legal Fee | +$25,000 | A non-recurring expense that won’t impact future profit. |
| Adjusted EBITDA | $675,000 | The true cash flow buyers will use for valuation. |
This Adjusted EBITDA figure is then multiplied by a market-based multiple to determine your practice’s total value. This multiple is influenced by your provider mix, growth trends, and payer mix.
A comprehensive valuation is the foundation of a successful practice transition strategy.
Post-Sale Considerations
The day the deal closes is not the end of the story. It is important to structure the transaction with your future in mind. What will your role be? How long are you expected to continue working in the practice? These terms are negotiated as part of the deal. Many physicians also choose to structure a deal that includes an “equity rollover.” This means you reinvest a portion of your sale proceeds back into the new, larger company. This gives you a second opportunity for a financial return when that larger entity is sold years later. Thinking about these post-sale details ensures your personal, financial, and legacy goals are protected throughout the transition.
Not sure if selling is right for you?
Frequently Asked Questions
What is driving the current market for selling dermatology practices in South Carolina?
The market for dermatology practices in South Carolina is driven by a wave of market consolidation. Private equity firms and large strategic buyers are actively seeking to acquire or partner with successful practices to build larger, more efficient organizations.
Why are buyers interested in acquiring dermatology practices in South Carolina?
Buyers are attracted because dermatology offers a stable reimbursement environment, growing demand for skin cancer-related services, and high-margin cash-pay cosmetic procedures. Additionally, the national physician shortage increases the value of established practices with loyal patients and skilled providers.
What should practice owners consider before selling their dermatology practice?
Owners should consider beyond the sale price, focusing on maintaining clinical autonomy, preserving practice culture, and finding buyers aligned with their values. It’s also crucial to prepare financial records and operational details to ensure a smooth sale process.
How is a dermatology practice typically valued during a sale?
Practices are valued based on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which reflects true cash flow. This involves adjusting net income by adding back owner-specific or one-time expenses to reveal hidden value, then applying a market-based multiple influenced by provider mix, growth, and payer mix.
What happens after the sale of a dermatology practice?
Post-sale, the transaction is structured with the seller’s future role and expectations in mind, including negotiated terms such as duration of continued work or equity rollover opportunities. This ensures personal, financial, and legacy goals are protected throughout the transition.
