Selling your medical practice to private equity has become one of the most common exit strategies for physician owners in Florida, from single-specialty groups to multi-location clinics. The offers can be attractive — a large upfront payment, ongoing equity in a growing platform, and relief from the administrative burden of running a business. But a PE transaction is structurally different from a traditional practice sale, and the terms that look good on the first page of a letter of intent can hide real financial and legal risk. Understanding what’s actually being negotiated — and what to watch for — matters more than the headline purchase price.

Why Private Equity Is Buying Physician Practices

PE firms buy practices to build “platforms”: a group of practices in the same specialty, consolidated under shared management, billing, and negotiating leverage with payers. Once a platform reaches sufficient scale, the PE firm typically sells it again in 3–7 years, often at a higher valuation multiple. That timeline shapes almost everything about how these deals are structured, including how much of your payment is guaranteed versus contingent on future performance.

Asset Deal or Equity Deal?

Most PE-backed acquisitions in Florida are structured as asset purchases, with the physician’s equity or membership interests folded into a newly formed management services organization (MSO). This structure exists largely because of Florida’s corporate practice of medicine restrictions, which limit non-physician ownership of the actual medical practice. Physicians typically retain nominal ownership of the professional entity while the PE-backed MSO owns and manages the business side — billing, staffing, real estate, equipment, and non-clinical operations. Understanding where the legal line falls between the two entities is one of the first things your attorney should walk through with you.

The Purchase Price Isn’t the Whole Story

A typical PE offer includes several components, and physicians often focus on the largest number without weighing how the rest of the package actually pays out:

• Cash at close — usually the guaranteed portion of the deal
• Rollover equity — an ownership stake in the new platform entity, which only has value if the platform performs well and eventually sells
• Earnouts — additional payments tied to hitting revenue or EBITDA targets over one to three years
• Employment or professional services agreement — your post-sale compensation, which is separate from the purchase price and often the most heavily negotiated document in the deal

Rollover equity in particular deserves scrutiny. It’s illiquid, it’s tied to the performance of a platform you no longer control, and the terms governing when and how you can cash it out are usually buried in a separate operating agreement.

Due Diligence Physicians Should Run — Not Just Undergo

Physicians tend to think of due diligence as something the buyer does to them. In reality, you should be running your own diligence on the buyer:

1. Review the platform’s track record. Has this PE firm or platform completed practice acquisitions before, and how have physicians in those deals fared post-close?
2. Get clarity on clinical autonomy. Who controls scheduling, staffing ratios, and clinical protocols after closing? Contracts should spell this out explicitly, not leave it implied.
3. Scrutinize the restrictive covenants. Non-compete and non-solicitation clauses in PE deals tend to be broader and longer than what physicians are used to — sometimes covering an entire region for several years.
4. Model the earnout scenarios. Ask for the specific formula and run the numbers under a conservative case, not just the projection the buyer presents.
5. Confirm regulatory compliance of the target structure. Stark Law, the Anti-Kickback Statute, and Florida’s CPOM rules all apply to how the MSO relationship is built. A structure that looks standard can still create liability exposure if it isn’t documented correctly.

How Long the Process Actually Takes

Physicians are often surprised by the timeline. From the first term sheet to a closed transaction, a PE-backed acquisition typically runs four to nine months, depending on the complexity of the practice and how many entities are involved (real estate, ancillary service lines, related management companies). Roughly speaking:

• Letter of intent to signed exclusivity: 1–3 weeks
• Financial, legal, and operational due diligence: 6–12 weeks
• Definitive agreement negotiation: 4–8 weeks, often running in parallel with diligence
• Regulatory review and closing conditions: 2–6 weeks, longer if licensure transfers or CON approvals are involved

Practices with clean financials, well-documented compliance programs, and no unresolved regulatory issues move faster. Practices that discover problems mid-diligence — unlicensed ancillary services, missing Stark-compliant lease agreements, or inconsistent coding practices — can see deals stall or the purchase price get renegotiated downward.

Tax Structure Affects What You Actually Keep

The difference between an asset sale and an equity rollover isn’t just a legal distinction — it has significant tax consequences. Cash received at closing is typically taxed as capital gains if the deal is structured properly, but allocation of the purchase price across asset classes (goodwill, equipment, non-compete consideration) changes how much of it is taxed at capital gains rates versus ordinary income rates. Rollover equity is generally not taxed at the time of the transaction, which can defer your tax liability — but it also means a portion of your “sale price” is really a bet on the platform’s future value. Coordinating your healthcare attorney with a tax advisor before the definitive agreement is signed, not after, is what actually protects your net proceeds.

Questions to Ask Before You Engage With a PE Buyer

• What is the platform’s investment horizon, and what happens to physicians when it sells again?
• How is the earnout calculated, and who controls the inputs to that calculation after closing?
• What operational decisions require physician sign-off versus MSO approval?
• Is there a physician advisory board or governance structure, or is input purely informal?
• What does the restrictive covenant cover geographically, and for how long after employment ends?

Red Flags Worth Slowing Down For

• Pressure to sign a letter of intent quickly, before you’ve had time to review the full deal structure
• Vague or shifting definitions of the metrics that trigger earnout payments
• Employment agreement terms that weren’t disclosed until late in the process
• Reluctance to explain how clinical decision-making authority will work post-close
• No clear exit mechanism for your rollover equity

Why Legal Counsel Matters Before You Sign an LOI

By the time a letter of intent is signed, much of the negotiating leverage has already shifted to the buyer, since LOIs often include exclusivity periods that prevent you from talking to other buyers. Involving healthcare counsel before that point — not after — gives you room to negotiate deal structure, valuation methodology, and the terms of your post-sale role while you still have multiple options on the table.

Selling your medical practice to private equity can be the right move for many Florida physicians, but the deal terms deserve the same scrutiny as a clinical decision with long-term consequences. An experienced healthcare attorney can review the letter of intent, structure the transaction to comply with Florida’s corporate practice of medicine rules, and negotiate the earnout, rollover equity, and restrictive covenant terms before you’re locked into exclusivity with a single buyer.

Considering an Offer From a Private Equity Buyer?

Florida Healthcare Law Firm has represented physicians on both the buy side and sell side of practice acquisitions — from single-location practices to multi-site groups — including structuring MSO relationships that comply with Florida’s corporate practice of medicine rules and negotiating earnout and rollover equity terms before contracts are signed. If you’ve received a letter of intent, the best time to bring in counsel is before you sign it, not after.

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