The Tennessee urology market is at an inflection point. A combination of an aging workforce and surging private equity interest creates a unique window of opportunity for practice owners. For those considering their next chapter, understanding this shifting landscape is the first step toward a successful and profitable transition. This guide provides key insights into the market, valuation, and sale process for urology practices in Tennessee.
Market Overview
The environment for selling a urology practice in Tennessee is shaped by two powerful forces. You need to understand both to position your practice correctly.
An Aging Workforce
The data tells a clear story. The median age of a practicing urologist is 54, and over a quarter are 65 or older. In Tennessee, with a urologist-to-population ratio of 4.57 per 100,000, this demographic reality suggests a wave of upcoming retirements. More owners will be looking to transition in the coming years, making preparation and timing more important than ever.
A Shifting Practice Landscape
Parallel to this, the traditional private practice model is changing. In 2014, over 64% of urologists were in private practice. Today, that number is just 42.4%. This is not a sign of weakness. It is a sign of consolidation and acquisition by larger, well-funded groups. These groups are actively seeking to partner with and acquire established practices across the state.
Key Considerations
Selling your practice is more than a financial transaction. It’s a major professional and personal decision. For urology owners in Tennessee, a few factors require special attention. State law restricts practice ownership to licensed providers, which means most private equity deals are structured through a Management Services Organization (MSO). Understanding how this impacts your role is key. Furthermore, with 60% of urologists reporting non-compete clauses, a careful review of your current contracts is needed early in the process. These layers of complexity, combined with the high demands of the profession, mean that a well-thought-out strategy is not just helpful, it is necessary.
Market Activity
The anecodotal chatter about practice sales is backed by real market movement. We are seeing a period of high activity, driven by a few key trends.
- Large-Scale Consolidation is Here. You can see this in major transactions like OneOncology’s acquisition of United Urology Group, which has a significant presence in Tennessee. Large strategic buyers are building networks, and independent practices are their primary targets.
- Private Equity is Actively Investing. Urology’s stable demand and opportunities for ancillary services make it highly attractive to financial sponsors. More than 11% of urologists have already worked for a PE-partnered practice, a number that is growing quickly.
- The Goal is Creating Platforms. Buyers are not just looking for a single office. They are looking for strong, reputable practices to serve as a “platform” for future growth in the region. If your practice is a leader in your local market, you are likely already on their radar.
Sale Process
Many owners believe selling a practice starts with finding a buyer. In reality, that is one of the later steps. A successful sale begins long before your practice is ever listed. The process typically starts with deep preparation, where you organize your financials and operational data to withstand scrutiny. This is followed by a comprehensive valuation to understand what your practice is truly worth. Only then does the work of confidentially marketing your practice to a curated list of qualified buyers begin. The final phase, due diligence, is where many deals encounter trouble. Being prepared for this intense review process is often the difference between a smooth closing and a failed transaction.
Valuation
“What is my practice worth?” is the ultimate question. The answer is not based on a simple revenue percentage. Sophisticated buyers value your practice based on a multiple of your Adjusted EBITDA. EBITDA is your Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of cash flow and profitability. “Adjusted” means it is normalized for owner-specific expenses and one-time costs to show the true economic engine of the business. The multiple applied to that EBITDA figure is where the market dynamics come in. It is influenced by many factors.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Provider Model | Owner-Reliant | Associate-Driven |
| Scale (EBITDA) | Under $500K | Over $1M+ |
| Growth Profile | Stagnant Revenue | Clear Expansion Path |
| Payer Mix | High Medicaid | Strong Commercial Mix |
An accurate valuation is the foundation of your entire exit strategy.
Post-Sale Considerations
Your focus should extend beyond the closing date. The structure of the deal will define your future. Thinking about these elements ahead of time allows you to find a partner who aligns with your personal and financial goals.
Your Future Role
Do you want to retire immediately, or are you interested in a phased retirement or part-time clinical work? A clear transition plan for yourself and your staff is a valuable asset in negotiations and ensures continuity of care for your patients.
Preserving Autonomy
A common fear is losing clinical autonomy. This is a valid concern, but it is not a foregone conclusion. The right partner will want to preserve the clinical excellence that made your practice successful in the first place. This is a key point to negotiate.
Structuring Your Exit
The final price is just one part of the deal. Many transactions include elements like equity rollover, where you retain a stake in the new, larger company. This gives you a “second bite at the apple” when that new company is sold years later. These structures can significantly increase your total long-term proceeds.
Frequently Asked Questions
What are the major factors driving the sale of urology practices in Tennessee?
The key factors include an aging workforce with many urologists nearing retirement, and a shift in the practice landscape with increasing consolidation and acquisition by larger groups and private equity investors.
How is the value of a urology practice in Tennessee determined?
Practice valuation is based on a multiple of the Adjusted EBITDA, which measures cash flow and profitability normalized for owner-specific expenses. Factors influencing the multiple include provider model, scale of EBITDA, growth potential, and payer mix.
What legal considerations should Tennessee urology practice owners be aware of when selling?
State law restricts practice ownership to licensed providers, so private equity deals are often structured through Management Services Organizations (MSOs). Additionally, non-compete clauses affect many sellers and require review during the sale process.
What does the sale process of a urology practice in Tennessee typically involve?
It starts with thorough preparation of financial and operational data, followed by a comprehensive valuation. Then the practice is confidentially marketed to qualified buyers. The final and critical phase is due diligence, where buyers conduct intensive reviews before closing.
What post-sale considerations should urology practice sellers in Tennessee keep in mind?
Sellers should plan their future role, such as immediate retirement or phased transition, negotiate to preserve clinical autonomy, and consider deal structures like equity rollover to retain a stake in the growing company and enhance long-term proceeds.