Information on Buying or Selling HealthCare Businesses / Medical Practices

Since 1995, we've helped folks buy Business and or sell Businesses, provided valuations on all types from small Businesses to Larger Merger and Acquisition deals, we’ve completed Hundreds of Successful Transactions. We can help you with your healthcare business for sale and Medical Practices for sale. We have Buyers and a track record of confidentially selling all types of Medical Clinics, including Pediatrics, Family, Internal Medicine, Cosmetic, Aesthetic, Allergy and Immunology, Weight loss, Family Medicine, Physical Therapy, Laser and Medical Research Clinics. We also specialize in Home Healthcare Agencies, Nurse Registries, Senior Care Businesses, ALF's, Adult Day Care, Med Spas, Chiropractic Clinics. We have also sold Compounding Pharmacies. We can help you buy or sell a Senior Care Franchise, we’ve successfully completed Franchise Re-sales for owners of Home Instead Franchisees as well as Home Helpers Franchisees. Are you thinking about selling your business and wondering how much businesses like yours are selling for? You can get a Free Online Healthcare Medical Business Comparative Market Analysis Report showing what Healthcare Businesses / Practices / Home Healthcare Agencies like yours have recently sold for by business type. You can use this information to decide if you really want to sell your business at this time or to see how the business you are about to purchase compares to other businesses. 

Vincenzo LoCricchio (586) 298-1240 or (813) 690-0109

Based in in Metro Detroit Macomb MI 

Licensed in Michigan 6504431164 and Florida BK624725

e-mail Vince@EnterpriseBrokers.com

BK624725

Published on October 21, 2019

When Buying or Selling a Medical Practice: EBITDA vs SDE 

Which Metric do Buyers use when assessing the Purchase of a Medical Clinic? The answer is that it depends on the size of the Business and the buyer. First let’s define EBITDA, Earnings before Interest, Taxes, Depreciation, and Amortization. The way to Calculate this is to simply add those items from the financial statements. This method assumes a “Passive” (not working in the business) owner and investor for example.

SDE is the acronym for Sellers Discretionary Earnings, AKA Sellers Discretionary Cash Flow, Adjusted Net and a few other similar sounding names. This Metric includes all of the EBITDA items listed above but also Assumes a Full-Time working owner and includes the Sellers Discretionary Expense “add backs”. Examples might be Travel that is not necessary for the business, a company car, a retirement plan for the owner of the business just to name a few.

An individual Doctor looking to buy a Medical Practice to work in and own will be looking at SDE to calculate how much they will make. An example would be an Internal Medicine Practice with $800k in collections and the Full-Time working Doctor owner is making $350k after all the bills are paid. A buyer might pay 1 to 2.5 times (maybe more) of the SDE to purchase that practice.

A Large Group or Hospital looking to buy this same Practice will be a somewhat passive investor and will include a Doctors Salary of $200k in the expenses. They will also add general and administrative cost and where the SDE was $350k in this example, the EBITDA is now around $100k for the same Business. With the owner Doctor leaving, they will also want the seller to “earn out” of the business for the risk that the patients don’t like the new Doctor they place in the Practice. This means that if the Collections decrease after the sale, the seller receives less money for the business. The large group may pay 2 to 3 times (could be more for a Business that has $1mm+ in EBITDA) the EBITDA but the higher Multiple is on a much smaller Number. 3 Times EBITDA of $100k in this example equals $300k price where 1.5 times SDE of $350k equals a price of $525k.

Keep in mind this is the Same Business, Same Numbers, just a different point of view from different types of buyers. Your Business has a different value to different types of buyers.

The Bottom line is that you need find the best buyer to get the best price for your Business when it is time to sell. If you are thinking about selling your Medical Practice and are not happy with the offers you have received from large group buyers, call Vince LoCricchio  BCI at 813 690-0109 for a free confidential consultation about buying or selling a Medical Practice or email Vince@EnterpriseBrokers.com 

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Vincenzo LoCricchio BCI

Business Broker Specializing in Healthcare and Medical Businesses at Healthcare Enterprise Brokers

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