Selling your gastroenterology and hepatology practice is a major decision. The Buffalo, NY market presents a unique landscape with high demand for specialized care, driven by both local needs and national trends like private equity interest. This guide offers clear insights into the current market, the sale process, and key valuation factors. Proper planning and a deep understanding of your options are the first steps toward a successful and rewarding transition. Not sure if selling is right for you? Our advisors can help you understand your options without any pressure.
The GI Market: High Demand in Western New York
Understanding the market is the first step. For GI and hepatology practices, the current climate is defined by significant growth and high demand, both nationally and here in the Buffalo region.
National Tailwinds
The demand for gastroenterology services is rising across the country. The North American market is projected to grow to over $23 billion, fueled by an aging population and a greater focus on digestive health. This growth is happening at the same time as a national shortage of over 1,600 gastroenterologists. For a practice owner, this imbalance of high demand and limited supply creates a very favorable environment. Buyers are actively seeking established practices to meet patient needs.
The Buffalo Landscape
Buffalo is a strong and stable healthcare market. The presence of major health systems like ECMC, Catholic Health, and UBMD creates a robust referral ecosystem and a large, concentrated patient base. An incoming buyer doesn’t have to build a market from scratch. They can acquire a practice that is already integrated into the Western New York healthcare community, making a turnkey operation in Buffalo particularly attractive.
What to Focus On Before a Sale
Beyond the market, you need to look inward at your practice. For a GI & Hepatology practice, a few areas require special attention. Your practice’s value is not just in its revenue but in its operational strengths. This includes the diversity of your payor mix, the condition of your equipment, and any ancillary services you offer, such as an in-office endoscopy suite or ambulatory surgery center (ASC).
Confidentiality is a major priority. A public sale announcement can disrupt your staff, worry patients, and alert competitors. A successful sale process must be managed with discretion from the very first conversation until the deal is closed. This protects the practice’s value and ensures a smooth operational environment throughout the transition.
Finally, think about your legacy. Your staff and patients depend on the practice. A well-structured transition plan is not just a selling point for a buyer. It is your responsibility to the people who helped you build your business. Planning for this continuity ensures your life’s work is protected and continues to thrive under new ownership.
3 Trends Driving Buffalo GI Practice Sales Today
The attractive market conditions have not gone unnoticed. Buyer activity, particularly from sophisticated investors, is high. Here are three trends you should know.
- Private Equity is Reshaping Gastroenterology. Nationally, private equity (PE) investment in GI is accelerating. Nearly 10% of all gastroenterologists now work for PE-backed platforms. These groups are looking to acquire established practices to build regional and national density. They bring capital and business expertise, but they also use a professionalized acquisition process.
- Buyers are Already in Your Backyard. This is not just a national trend. In Buffalo, private equity firms are already actively investing in healthcare assets, including local surgery centers. This means there is a pool of well-capitalized buyers familiar with the Western New York market who are actively seeking acquisition opportunities like yours.
- Competition Creates Opportunity. When multiple buyers are interested in a practice, it creates a competitive dynamic. This is the best way to ensure you receive the highest possible valuation and the most favorable terms. An expertly managed sale process can generate this competition, turning general market interest into concrete, top-tier offers.
What the Path to a Sale Looks Like
Selling your practice is a marathon, not a sprint. From the day you decide to explore a sale to the day you close the deal, the process can often take a year or more. It begins with preparation, where you organize your financial, operational, and legal documents. This is followed by a comprehensive valuation to determine a realistic and defensible asking price. Once that is set, the process moves to confidentially marketing the practice to a curated list of qualified buyers. After initial interest, you will enter negotiations on a Letter of Intent (LOI). Finally, the buyer conducts extensive due diligence, where they verify every aspect of your practice. This final stage is critical. Many deals fall apart here because of poor preparation. A smooth closing depends on having your house in order before the buyer ever comes to the door.
Determining Your Practice’s True Worth
How is a practice’s value actually determined? While you may hear about simple revenue multiples, sophisticated buyers focus on a more precise metric: Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents your practice’s true cash flow. It is calculated by taking your net income and adding back owner-specific expenses and one-time costs. Your final valuation is this Adjusted EBITDA number multiplied by a specific factor. That multiple is not fixed. It changes based on several risk and growth factors.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Provider Model | Owner-dependent | Associate-driven, multiple providers |
| Scale | Smaller, single-location | Multi-site or platform-ready |
| Growth | Stagnant patient volume | Clear path to add services/providers |
| Ancillaries | No in-house procedures | Integrated ASC or endoscopy suite |
A thorough valuation process analyzes these factors to build a compelling case for your practice’s maximum value.
Planning for Your Next Chapter
Closing the deal is not the end of the story. The structure of your sale has lasting implications for you, your finances, and your team. You need to decide what your role, if any, will be after the transition. Do you want to continue practicing for a few years, or are you ready to retire completely? A well-negotiated agreement will clearly define these expectations.
Modern deals often include more than just cash at closing. You might encounter an earnout, where a portion of the sale price is paid out over several years based on the practice hitting certain performance targets. Another common structure is an equity rollover, where you retain a minority stake in the new, larger company. This can be a powerful financial tool, giving you a “second bite at the apple” when the larger platform is eventually sold.
These structures require careful consideration. They can offer significant upside, but they also carry risk. Thinking through your personal and financial goals for the next five to ten years is a critical part of negotiating a deal that works for you long after the papers are signed.
Frequently Asked Questions
What is driving the demand for GI & Hepatology practices in Buffalo, NY?
The demand is driven by a growing need for specialized gastroenterology services nationally and locally due to an aging population and digestive health focus. Buffalo’s strong healthcare market with major health systems also supports high patient volume and referrals.
How does private equity influence the sale of GI practices in Buffalo?
Private equity firms are actively investing in GI practices, seeking established businesses to build regional platforms. They provide capital and business expertise and bring a professional acquisition process that can increase competitive buyer interest and valuation.
What factors impact the valuation of a GI & Hepatology practice?
Valuation depends on Adjusted EBITDA, which measures true cash flow. Factors include provider model, practice scale, growth potential, and ancillary services like in-office endoscopy or surgery centers. These determine the multiple applied to EBITDA for the final sale price.
What should I do to prepare my practice for a successful sale?
Key preparations include organizing financial, operational, and legal documents, maintaining confidentiality to protect value, and focusing on operational strengths such as diverse payor mix and quality equipment. Planning a smooth transition for staff and patients is also crucial.
What sale structures should I consider for my GI practice?
Common structures include cash at closing, earnouts tied to performance, and equity rollovers allowing continued stake in the new entity. Each has benefits and risks, influencing your financial and role expectations post-sale. Careful negotiation aligned with personal goals is essential.