The Memphis Ortho & MSK market is dynamic, with strong growth and active buyers creating new opportunities for practice owners. This guide provides strategic insights into the current landscape, from valuation to post-sale planning, helping you understand the path to a successful transition. Navigating this process requires careful preparation to capitalize on market momentum and achieve your personal and financial goals.
Favorable Winds: The Market for Ortho & MSK in Memphis
If you are considering the future of your Ortho & MSK practice, the current market conditions are worth your attention. Nationally, the demand for orthopedic care is stronger than ever. The U.S. market is projected to grow from $57.3 billion in 2023 to over $74 billion by 2028. This growth attracts significant buyer interest, from private equity firms to strategic health systems.
Memphis: A Healthcare Hub
This isn’t just a national trend. Memphis stands out with its powerful healthcare and life sciences industry. The local medical device sector alone contributes over $4 billion to the regional economy, creating a rich ecosystem that buyers find very attractive. For a seller, this means your practice is located in a city that is recognized as a center for medical excellence.
The Rise of Partnerships
We are seeing a clear trend of acquisitions and partnerships. Private equity groups are actively seeking to partner with strong physician practices, and orthopedic groups are a primary focus. This creates a competitive environment where well-positioned practices can command premium attention.
Beyond the Numbers: Key Considerations for Your Practice
A strong market is a great starting point, but a successful sale depends on navigating specific local and operational factors. Before you begin the process, it’s important to think through a few key areas that buyers will scrutinize. Preparing for these questions in advance can dramatically change the outcome of your sale.
Here are four critical points to consider:
- The Competitive Landscape. How does your practice stand out? In a market with established players like OrthoSouth and Campbell Clinic, buyers will want to understand your unique patient base, referral sources, and service lines.
- Memphis-Specific Deal Structures. The M&A environment in Memphis has unique features. For example, local hospitals may favor partnerships over outright acquisitions due to a history of antitrust scrutiny. Understanding these dynamics is key to finding the right type of buyer.
- Operational Strength. Beyond financials, how efficient is your practice? Buyers look for streamlined patient access, effective use of physical therapy, and strong ancillary service lines. These are powerful value drivers.
- Due Diligence Readiness. A potential buyer will dig deep into your financial performance and growth metrics. Having clean, clear, and well-organized data is not just helpful. It is required to build trust and maintain momentum during a sale.
Real Deals: Market Activity in Memphis
The consolidation and partnership trend is not just theoretical. It is actively reshaping the Memphis orthopedic landscape right now. Observing these moves can help you understand the types of opportunities available for your own practice.
Strategic Partnerships
We are seeing major players join forces to expand their reach and capabilities. The partnership between Baptist Memorial Health Care and OrthoSouth is a prime example of health systems and large specialty groups collaborating. This creates a powerful network for orthopedic care delivery in the region.
Platform Growth and Expansion
Established Memphis practices are also serving as platforms for regional growth. Campbell Clinic’s partnership with Appalachian Orthopedics shows how a renowned local group can attract other practices to join its platform, expanding its influence beyond the immediate Memphis area. These transactions demonstrate a healthy and active M&A environment where well-run practices are valuable strategic assets.
The Path to a Sale: A Structured Process
Selling your practice is not a single event. It is a structured process that unfolds over several months. Many owners think the right time to start planning is when they are ready to sell. Actually, the best time to start is one to two years before you plan to exit. This allows you to prepare properly and sell from a position of strength. A professionally managed process usually involves four key stages.
| Stage | Key Focus | Common Challenge |
|---|---|---|
| 1. Preparation & Valuation | Defining your goals, clarifying financials, and determining a realistic market value. | Underestimating value by not properly adjusting financials or understanding market multiples. |
| 2. Buyer Strategy | Confidentially identifying and approaching a curated list of the right strategic or financial buyers. | Accepting the first offer without creating a competitive environment to drive up value. |
| 3. Due Diligence | Providing organized financial, operational, and legal information for the buyer’s review. | Disorganized records or unexpected findings that can slow down or derail the entire deal. |
| 4. Negotiation & Closing | Finalizing the purchase price, deal structure, employment terms, and legal documents. | Overlooking critical details in the final agreement that impact taxes or future obligations. |
What Is Your Practice Really Worth?
It is the first question every owner asks: “What is my practice worth?” The answer is more complex than a simple rule of thumb. Sophisticated buyers don’t value a practice on revenue alone. They look at its profitability, or Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents the true cash flow of your business, normalized for any owner-specific or one-time expenses.
This Adjusted EBITDA is then multiplied by a number (the “multiple”) to determine your practice’s Enterprise Value. A practice with $1M in Adjusted EBITDA could be valued between 5.5x and 7.5x, but that multiple is not fixed. It changes based on several key factors:
- Scale and Provider Mix: Larger, multi-provider practices are seen as less risky and command higher multiples than solo-physician practices.
- Ancillary Services: Strong in-house services like physical therapy, imaging, or surgery centers increase profitability and value.
- Growth Potential: Is your practice growing? Do you have a clear plan for expansion? Buyers pay a premium for proven growth.
- Payer Mix: A healthy mix of commercial payers is typically viewed more favorably than a heavy reliance on government payers.
A proper valuation tells the story of your practice in a way that buyers understand and value.
After the Sale: Planning for Your Next Chapter
Signing the purchase agreement is a major milestone, but it is not the end of the journey. The decisions you make during the negotiation process will define your life after the sale. Thoughtful planning is crucial to protect your financial future, your legacy, and your team.
Your Future Role
Many owners worry about losing control. The good news is that you have options. Many deals, especially with private equity partners, involve the selling physician “rolling over” a portion of their equity. This means you remain a part-owner and continue to lead clinically, benefiting from the future growth of the larger organization.
Your Financial Outcome
The structure of your sale has huge implications for your after-tax proceeds. Decisions about an asset sale versus a stock sale, or how an earnout is structured, can significantly impact your final take-home amount. Planning this with an advisor who understands tax-efficient structures is a critical part of the process.
Protecting Your Legacy and Team
For many owners, the practice is more than a business. It’s a legacy built over decades with a dedicated team. A good transaction advisor helps ensure your sale agreement includes protections for your key staff and that the new partner is a good cultural fit, preserving the reputation you worked so hard to build.
Frequently Asked Questions
What is the current market outlook for selling an Ortho & MSK practice in Memphis, TN?
The Memphis Ortho & MSK market is dynamic and growing, supported by national demand and a strong local healthcare sector. The U.S. orthopedic market is expected to grow from $57.3 billion in 2023 to over $74 billion by 2028, attracting buyers such as private equity firms and health systems. Memphis benefits from a robust medical device industry worth over $4 billion, making it an attractive location for buyers.
What factors influence the valuation of an Ortho & MSK practice in Memphis?
Practice valuation is based on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) multiplied by a market multiple, usually between 5.5x and 7.5x. Key factors influencing this multiple include practice scale and provider mix, presence of ancillary services like physical therapy and imaging, growth potential, and payer mix favoring commercial insurance over government payers.
How should I prepare my practice for sale in Memphis?
Preparation includes understanding the competitive landscape, particularly how your practice stands out from local big players like OrthoSouth and Campbell Clinic. It also involves being aware of Memphis-specific deal structures, operational efficiencies, and ensuring due diligence readiness with well-organized financial and operational data. Starting preparation 1-2 years before the planned sale is recommended.
What are common deal structures for selling a practice in Memphis, and how do they affect the sale?
Memphis deal structures often favor partnerships over outright acquisitions, partly due to antitrust concerns involving local hospitals. This can influence negotiations and the types of buyers interested. Understanding these nuances is key to finding the right buyer and structuring the deal to achieve both financial and operational goals.
What should I consider for my role and financial planning after selling my Ortho & MSK practice?
Post-sale planning is crucial. Many deals allow physicians to “roll over” equity, remaining involved as part-owners and clinical leaders. The sale structure (asset vs. stock sale) and earnout terms impact your after-tax proceeds. Additionally, protecting your legacy and team by ensuring cultural fit and safeguards for key staff is important for long-term satisfaction.