PVR

Corporate & M&A

Independent practice valuation guide

Independent practices typically transact at 3x–7x normalized EBITDA depending on specialty, growth, and buyer type. MSO buyers pay higher multiples than internal buy-ins. Normalizing EBITDA means adding back owner comp above market, personal expenses, and one-time items — this is where most disputes happen.

By Jordan Alderman, MBA, CMPE · Reviewed by Rania Hassan, JD, CHC · Last reviewed · Methodology

Disclosure: Independent editorial. No pay-for-placement, no affiliate rankings. Full editorial standards.

Who this is for: Physician-owners considering MSO sale, partner buy-in, retirement, or estate planning.

The three valuation methods

  • Income approach (EBITDA multiple): most common for going-concern practices
  • Market approach (comparable transactions): supports the income approach
  • Asset approach: relevant when practice value ≤ FMV of equipment + AR

Typical EBITDA multiples by specialty (2026)

  • Primary care: 3x–5x normalized EBITDA
  • Behavioral health: 5x–8x (in demand)
  • Dermatology / cosmetics: 6x–10x
  • Ophthalmology: 5x–8x
  • GI: 6x–9x
  • Ortho / spine: 5x–8x
  • Cardiology: 4x–7x
  • Anesthesia / pain: 4x–7x

Normalization adjustments (add-backs)

  • Owner compensation above/below market for hours worked
  • Personal auto, phone, travel expenses
  • One-time legal or consulting fees
  • Non-recurring capex written to opex
  • Family members on payroll above market rate
  • Rent above/below FMV if related-party lease

What increases value

  • Growth trend (3-year revenue CAGR > 8%)
  • Payer diversity (no single payer > 25% of collections)
  • Provider diversity (no single provider > 40% of collections)
  • Documented clinical protocols and playbooks
  • Recurring / subscription revenue lines (DPC, aesthetic memberships)
  • Real estate ownership (separately valued)
  • Clean, audited financials (3+ years)

What decreases value

  • Single-provider dependence
  • Aging AR > 90 days > 15% of total
  • Poor documentation / high denial rate
  • Regulatory or compliance issues
  • Deferred capex on equipment or space
  • Non-transferable payer contracts

Process for a formal valuation

  • 3 years of tax returns + P&L + balance sheet
  • AR aging + payer mix report
  • Compensation detail by provider + staff role
  • Lease and equipment agreements
  • Engage independent valuator (not one recommended by buyer)
  • Budget 4–8 weeks and $8k–$25k for a defensible report

Related buyer guide

For deeper vendor evaluation criteria, see our consulting hub →