Guide to Selling a Neurology Practice in Maryland

The market for neurology practices in Maryland is active. Physician owners like you are seeing new opportunities for partnership and sale, driven by consolidation from hospitals and private equity firms. Navigating this landscape to protect your legacy and maximize your practice’s value requires a clear strategy. This guide provides insight into the Maryland market, key steps in the sale process, and how to prepare for a successful transition. The window of opportunity for optimal valuations shifts with market conditions.

Maryland Neurology Market Overview

If you own a neurology practice in Maryland, you’ve likely noticed the shift. The landscape is changing rapidly, with independent practices increasingly joining larger health systems, hospitals, and private equity platforms. In fact, private equity ownership of Maryland physician practices grew from just 1.8% in 2014 to over 15.5% by 2021. This trend shows a strong and growing appetite for well-run specialty practices like yours.

This consolidation brings both opportunity and challenges. While it creates a competitive market for sellers, it also happens against a backdrop of rising operational costs, staffing shortages, and complex payer negotiations. For a practice owner considering a sale, understanding these dynamics is the first step. The right partner can provide resources to overcome these hurdles, but finding that partner requires careful planning.

Key Considerations for a Successful Sale

Selling your practice is more than a financial transaction. Its about your future, your staff, and your patients. As you begin to think about the process, focus on these three areas.

1. Define Your “Why.” Are you seeking a better work-life balance, access to more resources, or a complete exit? Your personal and financial goals will determine the best type of buyer. A hospital may offer stability, while a private equity partner might offer a “second bite at the apple” through retained equity. Clearly defining your objectives is the foundation of a successful strategy.

2. Assess Your Operational Health. Buyers will perform deep due diligence. They will scrutinize your financial records, your billing and collection rates, and your compliance with Maryland Board of Physicians regulations. Getting your operational house in order now, before you go to market, can prevent surprises and strengthen your negotiating position.

3. Think About Your Legacy. What happens to your staff and your patients after the sale? The right deal structure can include protections for your team and ensure continuity of care. This isn’t just about selling a business; it’s about transitioning a legacy. The structure of your practice sale has major implications for your after-tax proceeds.

Maryland’s M&A Market Activity

The national trend of practice sales is strong, with 110 physician practice management transactions in the third quarter of 2024 alone. This activity is reflected in Maryland. While specific deal terms are often confidential, we can look at past examples. A solo neurology practice in Towson with gross collections of $850,000 was successfully sold, demonstrating a viable market for established local practices.

The key challenge for owners is sourcing current, relevant comparable sales. This data is rarely public. Sophisticated buyers have access to this information, which can put you at a disadvantage. Understanding what similar neurology practices in the region have recently sold for is crucial for setting realistic expectations and negotiating from a position of strength. This is where a confidential market comparison becomes a powerful tool.

The Practice Sale Process at a Glance

Selling your practice follows a structured path. While every deal is unique, the journey typically involves four key phases. We find that preparation started 2-3 years in advance yields the best outcomes, because buyers pay for proven performance, not just potential.

Phase 1: Preparation and Valuation

This is the foundational stage. It involves organizing your financial statements, optimizing your operations, and obtaining a comprehensive valuation to understand what your practice is worth in the current market. This is also when you define your strategic goals for the sale.

Phase 2: Marketing and Negotiation

Here, we confidentially market your practice to a curated list of qualified buyers. This creates a competitive environment to drive up value. We then manage negotiations on the key financial and non-financial terms of the deal, leading to a signed Letter of Intent (LOI).

Phase 3: Due Diligence

This is where many sales encounter unexpected challenges. The buyer will conduct a deep investigation of your practices financials, legal compliance, and operations. Being thoroughly prepared for this phase is critical to keeping the deal on track and on time.

Phase 4: Closing and Transition

The final stage involves finalizing legal documents, closing the transaction, and executing the transition plan. A well-designed plan ensures a smooth handover for you, your staff, and your patients.

How is a Neurology Practice Valued?

Valuing your neurology practice is a blend of science and art. While revenue is important, sophisticated buyers focus on a metric called Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents your practice’s true cash flow by normalizing for owner-specific expenses and one-time costs. This Adjusted EBITDA is then multiplied by a market-based number to determine your practice’s Enterprise Value.

The multiple isn’t a fixed number. It changes based on your practice’s specific risk and growth profile. Buyers pay more for practices that are stable, scalable, and less reliant on a single owner.

A comprehensive valuation is the foundation of a successful practice transition strategy.

Planning Your Future: Post-Sale Considerations

The day your practice sale closes is not the end of the journey. It is the beginning of a new chapter, and an effective plan addresses what happens next. Will you continue to work in the practice, and if so, for how long and in what capacity? Understanding the terms of your employment agreement and any restrictive covenants is critical.

Properly structuring the sale from the beginning has a massive impact on your after-tax proceeds. Planning for this can save you a significant amount on your final tax bill. Furthermore, a detailed transition plan is key to protecting your staff and ensuring the new owner can continue your legacy of excellent patient care. These are not afterthoughts. They are core components of a transition strategy that should be designed around your specific goals. Every practice sale has unique considerations that require personalized guidance.