If you own an Orthopedic or Musculoskeletal practice in New Mexico, the market is paying attention. The demand for ortho practices is strong nationwide, but New Mexico presents a unique landscape for sellers. With nearly 40% of the state’s healthcare facilities already owned by private equity, it’s clear that sophisticated buyers are actively investing here. This guide provides a direct overview of what this means for you and how to navigate the sale of your practice.
Market Overview
The current climate for selling an Ortho & MSK practice is favorable. Nationally, the market is projected to grow over 5% annually, reaching $74 billion by 2028. This growth attracts national interest from investors, particularly private equity firms looking to build larger platforms.
For you in New Mexico, this trend is even more pronounced. The high concentration of private equity in the state’s healthcare system means buyers are already knowledgeable about the local market and actively seeking opportunities. This is not a theoretical interest. It is an active acquisition environment.
Key Market Indicators for NM Ortho Practices
| Market Indicator | Current Trend | Implication for Your Practice |
|---|---|---|
| Private Equity Interest | High & Increasing | More potential buyers and competitive offers. |
| National Consolidation | Ongoing | Creates pressure to either sell strategically or compete with larger groups. |
| Industry Growth | Strong (5.3% CAGR) | Provides a compelling long-term story for potential buyers. |
Key Considerations
A strong market is a great starting point, but the most successful sales are built on careful preparation. Buyers look deeper than just the revenue figures. They assess risk and future stability.
Physician Dependence & Your Team
How much does the practice rely on you personally? A buyer’s biggest concern is what happens when you leave. A plan to transition relationships and empower your associate physicians and key staff is critical. Protecting your team is not just good for morale. It is a key part of demonstrating the practice9s ongoing value.
The Transition Plan
Thinking about your role after the sale is also important. Some physicians want a clean break, while others prefer to stay on for a few years. We find that control isn’t an all-or-nothing prospect. Many modern deal structures, like strategic partnerships, are designed to keep physicians in leadership roles while providing the capital for growth. Planning for this early gives you more options.
Market Activity
The high-level trends are translating into real-world transactions. Here is what we see happening on the ground:
- Platform Building: Private equity firms are not just buying practices. They are building large, regional orthopedic platforms. They seek strong practices like yours to serve as a foundation for future growth in the New Mexico market.
- Strategic Partnerships: Buyers often prefer to partner with existing physician leaders. They provide the business support and capital, while you continue to lead clinically. This alignment is becoming the new standard.
- Ancillary Service Focus: Practices with in-house ancillary services like physical therapy or imaging are in high demand. These integrated models are very attractive to buyers as they demonstrate operational maturity and diverse revenue streams.
This activity means that the best time to prepare is often 2-3 years before you plan to sell. Buyers pay for proven performance, not just potential. Preparing now puts you in the driver’s seat.
Sale Process
Selling your practice is a structured process. While every deal is unique, the journey typically follows a clear path. Knowing these steps helps you prepare for what is ahead.
Valuation and Preparation
This is the foundation. It involves more than a simple formula. It’s about understanding your true profitability and framing the story of your practice’s potential.
Confidential Marketing
We do not “list” your practice. A professional process involves identifying and confidentially approaching a curated list of the most strategic buyers for your specific goals, creating competitive tension.
Due Diligence
This is where buyers dig into your financials, operations, and legal compliance. It is the most intensive phase of a sale and where many deals falter without proper preparation. Any surprise at this stage can lower your valuation or end the conversation.
Negotiation and Closing
The final stage involves negotiating the definitive agreements and planning for a smooth transition of ownership.
Valuation
Understanding what your practice is truly worth is the first step in any successful transition. Buyers do not value practices based on revenue. They value them based on profitability, specifically a metric called Adjusted EBITDA.
Adjusted EBITDA is your practice’s earnings before interest, taxes, depreciation, and amortization. It is then “normalized” by adding back personal or one-time expenses to show the true cash flow available to a new owner.
This Adjusted EBITDA figure is then multiplied by a number (the “multiple”) to determine the enterprise value. For orthopedic practices, multiples typically range from 4x to 6x, but can go higher for well-run, strategic groups. What determines your multiple?
- Practice Size: Larger, more profitable practices command higher multiples.
- Provider Mix: Practices that are not solely dependent on the owner are seen as less risky.
- Growth Profile: A clear path to future growth is highly valuable.
- Ancillary Services: Integrated services like PT or imaging can increase the multiple.
Many practices are undervalued until their financials are properly normalized and their growth story is told correctly.
Post-Sale Considerations
The final signature on the sale agreement is a milestone, but it is not the end of the story. Planning for what comes next is crucial for securing your financial future and your legacy.
Tax-Efficient Structuring
How your sale is structured has massive implications for your after-tax proceeds. The difference between an asset sale and an entity sale can mean hundreds of thousands of dollars in your pocket. This must be planned well in advance of a transaction.
Protecting Your Legacy
A successful transition ensures your staff is supported and your patients continue to receive excellent care. This involves clear communication and working with a buyer who respects the culture you have built. This is a key part of our negotiation focus.
Your Next Chapter
Whether you plan to retire, work part-time, or take on a new challenge, defining your post-sale role early in the process gives you clarity and control.
Frequently Asked Questions
What is the current market trend for selling an Ortho & MSK practice in New Mexico?
The market for selling Ortho & MSK practices in New Mexico is very favorable. With nearly 40% of healthcare facilities owned by private equity, there is high and increasing interest from sophisticated buyers. The national market is growing over 5% annually, and private equity firms are actively investing to build larger orthopedic platforms.
How does private equity interest affect the sale of my Ortho & MSK practice in New Mexico?
High private equity interest means there are more potential buyers and competitive offers. This creates a competitive acquisition environment where practices like yours are highly sought after for strategic expansion in the state.
What are key factors buyers consider beyond revenue when buying my practice?
Buyers look beyond revenue to assess risk and future stability. Important factors include physician dependence (how much the practice relies on you), the strength and role of your team, your transition plan, and whether ancillary services are integrated, as these impact operational maturity and value.
How is the valuation of my Ortho & MSK practice determined?
Valuation is primarily based on Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization, adjusted for personal or one-time expenses). The practice’s enterprise value is calculated by multiplying this EBITDA by a multiple (usually 4x-6x) which depends on practice size, provider mix, growth potential, and ancillary services.
What should I consider for post-sale planning of my Ortho & MSK practice?
Post-sale considerations include tax-efficient structuring to maximize after-tax proceeds, protecting your legacy by ensuring staff support and patient care continuity, and defining your role after the sale, whether retirement, part-time work, or new ventures to maintain clarity and control.
