The Michigan urgent care market is at a pivotal moment. While projected to more than double in value this decade, the landscape is also seeing rapid consolidation. For practice owners, this presents both a significant opportunity and a complex challenge. Understanding your position is the first step toward a successful transition. This guide provides a direct overview of the market, key considerations for selling, and the valuation process.
A Market of Growth and Competition
The Michigan urgent care sector is booming. The market was valued at over $715 million in 2020 and is on track to hit $1.6 billion by 2028. This growth is visible on the ground. The number of urgent care centers in the state grew from 170 to 541 in just over a decade. While this signals a high-demand environment, it also brings challenges. This rapid expansion is increasing competition among independent practices and drawing the attention of large hospital systems, who are actively acquiring clinics to expand their footprint. For you, the practice owner, this means the market is active, but also more competitive than ever. Navigating this landscape requires a clear understanding of where you fit.
Three Factors to Watch When Selling
As you consider a sale, a few specific factors in Michigan demand your attention. Proactive planning around these points can significantly impact your outcome.
Navigating Market Density
With over 500 centers now operating, standing out is critical. Buyers are looking for practices that are not just profitable but also hold a defensible market position. This could be through a loyal patient base, a unique service offering, or highly efficient operations. Simply being another urgent care is no longer enough.
Competing With Health Systems
Large health systems view urgent care centers as vital entry points into their networks. They are strategic, experienced buyers. When you go to market, you are not just competing with them for patients, but you may be negotiating with them at the deal table. Understanding their objectives is key to a successful negotiation.
Ensuring a Smooth Hand-Off
Selling your practice involves more than a financial transaction. You have responsibilities to your patients and your staff. Planning for the secure transfer of medical records and communicating the transition to your team are critical steps that protect your legacy and ensure compliance with state regulations.
Consolidation is Happening Now
The Michigan urgent care market is not just growing. It is actively consolidating. This trend is a clear indicator that strategic buyers see long term value in the state. For instance, Mercy Health recently strengthened its Michigan presence by acquiring 10 urgent care locations. Similarly, NextCare, a major national operator, entered the Michigan market by purchasing a 9-clinic group. These are not small deals. They show that well-run practices are attractive acquisition targets for large, well-capitalized organizations. For independent owners, this activity signals that buyers are here and ready to invest. The question is how to position your practice to attract the best offer from the right partner.
The Four Phases of a Successful Sale
Selling a practice is a structured process, not a single event. Buyers pay for proven performance, so the work you do before going to market is often what drives the highest value. We find the most successful sales follow a clear path.
- Strategic Preparation. Many owners think this phase starts when they decide to sell. The best time to start is actually two to three years before a potential sale. This is where you clean up your financials, review contracts, and optimize operations so your practice’s story is clear and compelling to a buyer.
- Professional Valuation. Before you enter any discussions, you need a clear, objective understanding of what your practice is worth. This goes beyond a simple rule of thumb and establishes the foundation for your entire negotiation strategy.
- Confidential Marketing. Finding the right buyer requires a targeted and confidential approach. The goal is to create a competitive environment among qualified buyers without disrupting your staff, patients, or competitors.
- Negotiation and Due Diligence. This is where the deal is finalized. After agreeing on a price and terms in a Letter of Intent, the buyer will conduct a deep dive into your practice. Being prepared for their questions is what prevents surprises and keeps the deal on track.
How Buyers Determine Your Practice’s Value
What is your urgent care practice really worth? While you may hear about simple multiples of revenue, sophisticated buyers look deeper. They focus on a figure called Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Think of this as your practice’s true cash flow. We calculate it by taking your net income and adding back owner-specific expenses, like an above-market salary or personal car lease, to show the full earning potential to a new owner. This Adjusted EBITDA is then multiplied by a specific number, the valuation multiple. This multiple is not one-size-fits-all. It’s influenced by your practice’s size, its reliance on you versus other providers, its growth rate, and its payer mix. A professional valuation is the only way to accurately model these factors and determine a defensible price.
Planning for Life After the Sale
The day you sign the closing documents is a beginning, not an end. The structure of your deal has major implications for your finances, your career, and your team. Thinking through these elements beforehand is critical to achieving your personal and financial goals. Many owners are concerned about losing control, but modern deal structures offer more flexibility than you might think.
Here are a few key areas to plan for during the sale process.
| Consideration | Why It Matters for You |
|---|---|
| Your Future Role | Do you want to keep practicing for a few years, or retire immediately? Your role post-sale is a key point of negotiation and can be structured as an employment agreement or a short-term transition plan. |
| Equity Rollover | Many deals allow you to “roll over” a portion of your ownership into the new, larger company. This allows you to take cash off the table now while participating in the future growth of the combined entity. |
| Tax Structure | The way your sale is structured as an asset or entity sale can have a significant impact on your net, after-tax proceeds. Planning for this in advance can save you a substantial amount. |
| Staff & Legacy | A key goal for most owners is ensuring their team is taken care of. Finding a buyer whose culture aligns with yours and who plans to retain your staff is crucial for protecting the legacy you’ve built. |
Every practice owner has unique goals. Getting the right guidance ensures your sale is structured to meet them.
Frequently Asked Questions
What is the current trend in the Michigan urgent care market and how does it affect selling a practice?
The Michigan urgent care market is rapidly growing and consolidating, with its value expected to more than double by 2028. While this growth presents significant opportunities for practice owners to sell at attractive valuations, it also brings increased competition both from independent centers and large health systems acquiring clinics. Sellers need to understand their practice’s position in this competitive landscape to navigate a successful sale.
What are the key factors an owner should consider when selling a Michigan urgent care practice?
Owners should focus on three main factors: 1) Market density — standing out with a defensible market position beyond just profitability; 2) Competing with large health systems who are strategic and experienced buyers with specific objectives; 3) Ensuring a smooth hand-off that responsibly transfers patient records and communicates changes to staff while complying with regulations.
How do buyers typically value an urgent care practice in Michigan?
Buyers often value a practice based on Adjusted EBITDA, which reflects true cash flow by adding back owner-specific expenses to net income. This figure is then multiplied by a valuation multiple influenced by factors such as practice size, reliance on the owner, growth rate, and payer mix. A professional valuation is essential to accurately determine a defensible selling price.
What are the four phases of selling a Michigan urgent care practice successfully?
1) Strategic Preparation — starting two to three years before sale to optimize financials and operations; 2) Professional Valuation — obtaining an objective assessment of practice worth; 3) Confidential Marketing — targeting qualified buyers without disrupting operations; 4) Negotiation and Due Diligence — finalizing terms and preparing for buyer scrutiny to complete the deal.
What important considerations should a seller plan for after completing the sale?
After the sale, key considerations include deciding on the seller’s future role (retirement or continued practice), the possibility of equity rollover to participate in future growth, structuring the tax aspects of the deal for maximum benefit, and ensuring the buyer will retain staff and uphold the practice’s legacy. Careful planning in these areas helps meet personal and financial goals post-sale.
