Platano Advisors · Insights
Every broker you talk to will dangle the biggest multiple they can in front of you. It is how they win the listing. Here is the honest version.
Your multiple is not one number. It is a function of your size, your structure, and the pool of buyers who can realistically compete for your practice.
Understand which category you are actually in and you stop negotiating against a fantasy number. You start building toward a real one. We sort medical practices into four categories. These are not marketing labels. They are the buckets buyers use to price a deal, and the jump between them is bigger than most owners expect.
| Category | Providers | Locations | Active Patients | Adj. EBITDA | Multiple |
|---|---|---|---|---|---|
| Single-Provider Low end | 1 | 1 | One panel | Under ~$200K | 2 – 3.5× |
| Small Group | 2 – 3 | 1 | A few panels | ~$200K – $1M | 3 – 5× |
| Mid-Size Group | 4 – 8 | 2 – 3 | Multiple panels | ~$1M – $5M | 4 – 7× |
| Scale Group Premium | 8+ | Multiple | Highly diversified panel | ~$5M+ | 7 – 10× |
Provider, patient, and EBITDA figures are typical profiles, not hard rules. Specialty, payer mix, and local market shift them.
The single biggest thing that caps your multiple is being a one-provider practice. If the practice is you, a buyer is really buying a job, not a business, and they price it that way. That is why so many owners are surprised: they hear about 6× and 8× deals, but those numbers live two or three categories up from where they actually sit.
One provider, one location. The most common practice in the market and the one that gets the lowest end of the scale. The value is tied to a single person, so buyers discount for the risk that the person leaves. Your best move here is not chasing a premium multiple. It is proving the practice can run without you and adding a second provider before you go to market.
Two or three providers under one roof. You have moved past pure owner-dependence, and a wider set of buyers will look. Clean books and a documented handoff are what separate the top of this range from the bottom.
A few more providers and a couple of locations. This is where real buyer competition starts. More EBITDA, more patients, and infrastructure that a buyer can build on. Second-bite equity rollover becomes worth negotiating here, and a diverse payer mix starts to pay off directly in your multiple.
Multiple locations, a full provider team, and a management layer that runs the business. This is a completely different game, and it is where the crazy multiples get talked about. Done right, a medical practice at this scale lands somewhere between 7 and 10 times.
Multiples do not expand by magic as you move up the table. They expand because a different kind of buyer shows up. There are two, and they price your practice in completely different ways.
Financial buyers are anyone buying your practice with borrowed money. Private equity platforms and funds are part of this group, but so is the individual physician or small group using an SBA loan or bank financing to acquire you. And that is almost everyone: more than 90% of businesses are bought with borrowed funds. Because a lender has to sign off, the multiple is capped by what that debt can support. That is why in the small-to-mid range the numbers stay contained, the deal has to pencil out. Financial buyers are the vast majority of your buyer pool, and they pay for clean, transferable cash flow.
Strategic buyers are larger operators already in your space. They do not buy your cash flow, they buy synergy. Here is the part that matters: the EBITDA you run your practice at is not the EBITDA they will run it at. Drop your same practice onto their platform, with their payer contracts, their technology, and their absorbed overhead, and it produces more profit than it does for you. So a higher multiple on your number can still be a bargain for them. That is why multiples stretch as you move from mid-size toward scale.
| Financial Buyer | Strategic Buyer | |
|---|---|---|
| Who they are | Anyone buying with borrowed money, from a physician with an SBA loan to a private equity fund | Larger operators already in your specialty and market |
| What they pay for | Clean, transferable cash flow | Synergy. Your practice is worth more on their platform |
| How the multiple is set | Capped by what a lender will finance, so it stays contained | Their EBITDA on your practice is higher than yours, so it expands past the financial ceiling |
| Where they cluster | Small to mid-size groups | Any practice that fits their strategy, depending on each company’s own criteria |
| Share of the buyer pool | The vast majority. Over 90% of deals use borrowed funds | A small slice. Roughly 5% for a precise fit |
Those multiples are real, and now you know where they come from: strategic buyers paying for synergy, not financial buyers stretching. Everyone wants that number. Here is the catch.
There are not many strategics. If your entire plan is that one of them happens to want a clinic exactly like yours, in a region like yours, with the payer contracts you happen to hold, you are fishing in maybe 5% of the buyer pool. That is not a strategy. That is praying the right acquirer walks through the door, and that does not work in something this hard.
Build a practice that competes hard for the other 95% first. If a strategic shows up, that is upside, not the plan.
Here is the part most sellers get backwards. These are not bonus points that push your number up. Most of them are table stakes. A buyer does not pay you extra for clean books and documented systems. They pay you less when those things are missing. Almost every factor cuts in both directions.
| Factor | Pulls it down | Pulls it up |
|---|---|---|
| Documented SOPs & systems | Missing, or living only in the owner’s head. This is a discount, not a neutral. | Fully documented, so the practice runs without you. |
| Malpractice & claims history | Open or repeated claims drag the number down. | A clean history is expected. It protects your multiple, it does not add a premium. |
| Payer mix | Over-reliance on any single payer. That is payer concentration, and concentration is risk. | A diverse mix across payers and lines of business. |
| Patient & referral base | Revenue leaning on a handful of referrers. | A broad, sticky patient base no one buyer can unwind. |
| Owner dependence | The practice is the owner. | A provider team and a brand that carry it. |
| Books & financials | Messy, commingled, unclear add-backs. | Clean statements with add-backs documented and defensible. |
You have probably been told that Medicaid and Medicare are bad and commercial is good. That is not the real rule. A buyer is not scared of Medicaid or Medicare. A buyer is scared of concentration. If one payer, even a great commercial one, makes up too much of your revenue, that is a risk they will discount. What lifts your multiple is a diverse payer mix across lines of business, so no single contract can sink the practice. Balance beats any one payer type.
Book a free, confidential call and we will pressure-test your number before any broker gets the chance to inflate it.
Schedule Your Free CallMultiples move by specialty as well as by size. We break down the ranges buyers actually apply when you sell a primary care practice, sell a medspa, or sell a specialty practice.
New to this? Start with How to Sell a Medical Practice, our complete guide, or see how we run a sale at Platano Advisors.
