Selling the urology practice you’ve spent years building is one of the most significant decisions of your career. In Wisconsin, the current market presents unique opportunities for practice owners, but navigating the process requires careful planning and a deep understanding of market dynamics, valuation, and state-specific regulations. This guide offers key insights to help you prepare for a successful and profitable transition.
Market Overview
The environment for selling a urology practice is strong. An aging population is increasing demand for urological services, making established practices in Wisconsin attractive targets for a growing pool of buyers. These buyers range from local health systems to national urology platforms backed by private equity. They are all looking for well-run practices with a stable patient base and opportunities for growth.
The Wisconsin Landscape
Wisconsin presents a stable yet competitive healthcare market. Buyers are drawn to the state’s favorable demographics and established healthcare infrastructure. However, this also means they are sophisticated and conduct thorough due diligence. A practice that is professionally prepared for sale stands out and can command a premium valuation. Understanding this landscape is the first step toward positioning your practice for the best possible outcome.
Key Considerations for Selling
Selling a urology practice in Wisconsin involves more than just finding a buyer. You must navigate specific financial, legal, and operational hurdles. Getting these details right from the start protects your interests and maximizes your final sale price.
Here are three critical factors for Wisconsin urologists to consider:
- Wisconsin’s Corporate Practice of Medicine (CPOM) Doctrine. This is a major factor. Wisconsin law has specific rules about who can own a medical practice. Structuring a sale to a non-physician entity, like a private equity platform, requires expert legal and advisory guidance to ensure the transaction is compliant. An improperly structured deal can be unwound, creating significant risk.
- Payer Contract Transferability. Your contracts with insurance payers are a core asset. You need to know if these contracts can be easily transferred to a new owner. A hiccup here can delay or devalue a sale, so early investigation is critical.
- Real Estate Decisions. If you own your building, you must decide whether to sell it with the practice or retain it and create a lease agreement with the new owner. This choice has major financial and tax implications that should be modeled carefully.
Market Activity
The M&A market for urology practices is active. We are seeing a variety of buyers compete for high-quality practices, which creates a favorable environment for sellers. However, not all buyers are the same. Each type has different goals, which influences the kind of deal they will offer. Your personal and financial objectives will determine which buyer profile is the right fit for you and your legacy.
| Buyer Type | Primary Motivation | Typical Deal Structure |
|---|---|---|
| Hospitals/Health Systems | Expand referral network, secure patient flow | Mostly cash purchase, employment agreement |
| Private Equity Platforms | Growth through acquisition, operational efficiency | Cash plus equity rollover, partnership model |
| Large Urology Groups | Increase market share, achieve economies of scale | Varies; can be cash, equity, or a combination |
Understanding these potential partners is key. Many physicians think selling means losing control, but that isn’t always true. We specialize in finding partners and structuring deals, like minority recapitalizations, that keep physicians in control of clinical decisions while providing the resources to grow.
The Sale Process
A successful practice sale is not an event, it is a process. Many owners wait until they are ready to retire to think about selling, but the ideal time to start preparing is two to three years before you plan to exit. Buyers pay for proven, predictable performance, not last-minute potential. A structured process ensures you sell from a position of strength.
The journey typically involves four key phases:
- Preparation and Valuation. This is the most important phase. We work with you to analyze your financials, normalize your earnings, and prepare marketing materials that tell a compelling story about your practice’s value and future potential.
- Confidential Marketing. We identify and confidentially approach a curated list of qualified buyers from our proprietary database. This creates competitive tension, which is essential for driving up the price and improving terms.
- Negotiation and Due Diligence. We help you evaluate offers and negotiate the key financial and non-financial terms of a Letter of Intent (LOI). We then manage the buyer’s due diligence process to prevent surprises and keep the deal on track.
- Closing. Our team works alongside your legal counsel to finalize the definitive agreements and ensure a smooth transition of ownership, protecting your legacy and your staff.
Understanding Your Practice’s True Value
Most practice owners underestimate what their practice is worth. They often think in terms of simple revenue multiples or the value of their equipment. Sophisticated buyers, however, use a different metric to determine value.
Beyond ‘Rules of Thumb’
The most important metric in a practice valuation is Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents the true cash flow and profitability of your practice. It is calculated by taking your net income and adding back owner-specific expenses and one-time costs.
The Power of Adjusted EBITDA
For example, a practice with $500,000 in net income might have an owner salary that is $150,000 above the market rate and $50,000 in personal expenses run through the business. Its Adjusted EBITDA would be $700,000. This 40% increase in perceived earnings can dramatically increase your practice’s valuation.
Your Multiple is Not a Guess
The Adjusted EBITDA is then multiplied by a number (the “multiple”) to arrive at the enterprise value. This multiple is not a guess. It is determined by factors like your practice’s size, growth trajectory, provider mix, and location. For established, multi-provider urology practices in a good market, these multiples can be significant. Properly calculating and justifying this multiple is where expert guidance creates the most value.
Post-Sale Considerations
Finalizing the sale is not the end of the journey. Your role, the future of your staff, and your financial strategy all need to be carefully planned as part of the deal structure. Thinking about these elements early ensures the transition aligns with your personal and professional goals.
Here are three questions to guide your post-sale planning:
- What will my new role be? Do you want to continue practicing full-time, work part-time, or retire completely? Your desired level of involvement will shape the employment agreement and is a key point of negotiation.
- How are my legacy and staff protected? A good transaction plan includes provisions to care for your long-term employees and ensure continuity of care for your patients. This protects the legacy you have built in the community.
- What does my financial future look like? The deal structure has major implications for your after-tax proceeds. Options like an equity rollover, where you retain a minority stake in the new company, can offer a “second bite at the apple” and significant upside when the larger platform is eventually sold.
Frequently Asked Questions
What makes the Wisconsin market favorable for selling a urology practice?
Wisconsin’s aging population is increasing demand for urological services, attracting buyers like local health systems and national urology platforms. The state’s stable healthcare market and favorable demographics make well-run practices with stable patient bases very attractive, enabling sellers to command a premium valuation.
What legal considerations should I be aware of when selling my urology practice in Wisconsin?
One key legal factor is Wisconsin’s Corporate Practice of Medicine (CPOM) Doctrine, which restricts who can own medical practices. Sales to non-physician entities, such as private equity firms, require expert legal and advisory guidance to ensure compliance, as improperly structured deals risk being unwound.
How does the transferability of payer contracts impact my urology practice sale?
Payer contracts with insurance companies are core assets of the practice. If these contracts are not transferable or there are complications, it can delay or reduce the value of the sale. Early investigation into contract transferability is critical to avoid surprises during the sale process.
What factors determine the valuation of a urology practice in Wisconsin?
The primary valuation metric is Adjusted EBITDA, which calculates the practice’s true cash flow by adjusting net income for owner-specific and one-time expenses. This figure is then multiplied by a multiple determined by factors like size, growth, provider mix, and location. Proper calculation and expert guidance are essential to maximize valuation.
What should I consider for post-sale planning after selling my urology practice in Wisconsin?
Post-sale considerations include deciding your future role (full-time, part-time, or retirement), protecting your legacy and staff through provisions for long-term employees and patient continuity, and planning your financial future including deal structures like equity rollovers that allow retaining a minority stake for additional financial upside.