The market for orthopedic and musculoskeletal (MSK) practices is strong, and Charleston is a prime location. As a practice owner, you’ve likely thought about what the future holds. Selling your practice is a major decision that involves more than just a handshake and a final price. It’s about securing your financial future, protecting the team you built, and ensuring your patients continue to receive excellent care. This guide walks you through the key factors to consider when selling your Ortho & MSK practice in the Charleston market. Proper preparation is the first step toward a successful outcome.
Charleston’s Orthopedic Market Overview
The timing for considering a sale is excellent. The national orthopedic market is not just stable; it’s growing at a notable pace, projected to expand by over 5% annually through 2028. This growth is driven by powerful, long-term trends that directly benefit practices like yours in Charleston.
A Growing National Tide
An aging population and advancements in medical technology mean the demand for orthopedic and MSK services is higher than ever. More patients require joint replacements, sports medicine, and rehabilitative care, which makes established practices an attractive asset for buyers.
The Charleston Advantage
Charleston is a magnet for growth, attracting new residents and thriving businesses. This creates a robust patient base and a healthy economic environment. For a potential buyer, a practice in a high-growth area like Charleston is far more appealing than one in a stagnant market. They aren’t just buying your current patient list; they are investing in the future of the community.
Key Considerations for a South Carolina Practice
While the market is favorable, selling a practice in South Carolina has specific details you must address. Buyers perform deep analysis on a practice before making an offer, and being prepared for their questions is critical.
They will look closely at your compliance with all healthcare regulations. Any past issues can become a major hurdle. Similarly, your staffing is a key part of your practice’s value. With staff costs typically representing 24-28% of revenue, a stable, well-managed team is a huge asset.
Most importantly, South Carolina law states that a non-physician cannot own a medical practice. This means any sale must be to a licensed doctor or a group where doctors maintain control. This rule heavily influences how a deal must be structured, and navigating it correctly is vital to a successful and legal transaction.
Who is Buying Ortho & MSK Practices?
The strong market has attracted a range of sophisticated buyers, each with different goals and structures. Understanding who they are helps you decide what kind of partner you want for your practice’s future. The main buyers in the Charleston area typically fall into three categories:
- Private Equity Groups: These investment firms partner with practices to grow them into larger regional or national platforms. They often offer structures that allow you to sell a majority of your practice while retaining some ownership, providing a “second bite of the apple” when the larger platform is sold years later.
- Hospital Systems: Local and regional hospitals are often looking to expand their orthopedic service lines. A sale to a hospital system typically means becoming an employee of the system, which can offer stability and reduced administrative burdens.
- Large Orthopedic Groups: Expanding multi-site practices are often looking to acquire smaller practices to expand their geographic footprint. This can be a good fit if you want your practice to join a larger, physician-led organization.
The Path to a Successful Sale
A successful practice sale does not happen by accident. It follows a structured process designed to protect your confidentiality and maximize your outcome. It begins long before the “For Sale” sign goes up.
The first step is understanding what your practice is truly worth. Next comes preparation, where we work with owners to organize their financials and practice data to present it in the best possible light. Only then do we confidentially approach a curated list of qualified buyers to generate interest. The final stages involve navigating buyer due diligence, where they inspect every aspect of your practice, and negotiating the fine points of the deal. Many sales encounter trouble during due diligence, which is why having an experienced guide to manage the process is so important.
What Is Your Practice Really Worth?
Practice owners often think of their practice’s value in terms of revenue or assets. However, sophisticated buyers use a different metric: Adjusted EBITDA. This stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a measure of your practice’s true cash flow.
We get to this number by taking your net income and adding back expenses that a new owner would not have, like your personal car lease or an above-market salary. Normalizing these expenses reveals the practice’s real profitability. This Adjusted EBITDA is then multiplied by a market-based number (a “multiple”) to determine the practice’s value. This multiple changes based on your practice’s size, growth rate, and provider team.
Here is a simplified example of how we find value that is often missed.
| Financial Item | Reported Figure | Adjustment | Adjusted Figure |
|---|---|---|---|
| Net Income | $400,000 | – | $400,000 |
| Owner’s Excess Salary | – | +$100,000 | – |
| One-Time Legal Fee | – | +$25,000 | – |
| Adjusted EBITDA | – | – | $525,000 |
In this case, a proper valuation uncovered $125,000 in additional value that directly increases the sale price.
Planning for Life After the Sale
The moment the deal closes is not the end of the journey. The decisions you make during the sale will shape your life for years to come. Thinking about these factors ahead of time is one of the most important parts of the process.
There are several key areas to plan for:
- Your Financial Future: The structure of the sale has major tax implications. A well-planned deal can significantly increase your after-tax proceeds, leaving more for your retirement and other goals.
- Your Team’s Transition: You’ve spent years building a loyal team. A good transition plan ensures your staff is taken care of and your legacy of patient care continues.
- Your Clinical Role: Do you want to continue practicing for a few years, or are you ready to retire completely? The deal can be structured to fit your personal timeline and goals, whether that means staying on as a clinical leader or walking away on day one.
Your exit should be on your terms. An M&A advisor can help you design a deal that aligns with your professional, financial, and personal objectives.
Frequently Asked Questions
What is the current market outlook for selling an Ortho & MSK practice in Charleston, SC?
The national orthopedic market is growing steadily, with an expected expansion of over 5% annually through 2028. Charleston is a high-growth area attracting new residents and businesses, making it an attractive market for selling orthopedic and musculoskeletal (MSK) practices.
What are the key legal requirements for selling a medical practice in South Carolina?
South Carolina law prohibits non-physicians from owning medical practices. This means that any sale must be to a licensed doctor or a physician-led group. This legal requirement heavily influences the deal structure to ensure the transaction is successful and compliant.
Who are the typical buyers for Ortho & MSK practices in Charleston?
The main buyers include Private Equity Groups looking to grow practices into larger platforms, Hospital Systems seeking to expand their orthopedic service lines, and Large Orthopedic Groups aiming to expand their geographic footprint by acquiring smaller practices.
How is the value of an Ortho & MSK practice determined?
Practice value is primarily based on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which reflects true cash flow. Adjustments are made to net income to remove non-recurring or personal expenses, revealing real profitability, which is then multiplied by a market multiple that varies with practice size, growth, and provider team.
What should practice owners consider when planning for life after selling their Ortho & MSK practice?
Owners should plan for their financial future, including tax implications of the sale structure, and consider their team’s transition to ensure stability. They should also decide their post-sale role, whether to continue practicing or retire, and structure the deal accordingly to align with personal and professional goals.