Business Valuation Guide
Most medical practices sell for 2.0x to 3.6x Seller's Discretionary Earnings, with the midpoint near 2.8x. A medical practice with $250,000 of SDE would typically fall between $500,000 and $900,000.
Medical practices are valued on the same earnings logic as any other business, with two complications: state corporate-practice-of-medicine rules restrict who may own them, and payer mix drives collections more than pricing does. Both narrow the buyer pool, which affects the multiple.
Start with Seller's Discretionary Earnings (SDE): net profit plus the owner's pay and perks, interest, depreciation and one-time costs.
Then apply the industry multiple. For medical practices that band runs 2.0x to 3.6x, and where a specific business lands inside it is decided by the factors below. Typical SDE margin for this category runs around 18% of revenue, which is a useful sanity check: if your margin is far off that, the multiple moves with it.
Above roughly $1M to $2M of EBITDA the buyer pool changes. Individual buyers give way to private equity platforms and strategic acquirers, and pricing restates onto an EBITDA multiple of 4x to 6.5x rather than a multiple of SDE.
Other physicians and physician groups, hospital systems acquiring referral bases, and private-equity-backed platforms in specialties like dermatology, ophthalmology and orthopaedics.
A typical sale runs 9 to 12 months from going to market to closing, assuming your financials are ready when you start. Credentialing and payer contract assignment take longer than any other step and cannot be compressed. Start the transfer paperwork the moment an LOI is signed, not at closing.
Most independent medical practices sell for roughly 2.0x to 3.6x Seller's Discretionary Earnings. Specialties with ancillary revenue and employed providers sit toward the top of that band. Practices above roughly $1M in EBITDA typically attract private equity and reprice onto an EBITDA multiple in the 4.0x to 6.5x range.
It depends on the state. Many states enforce corporate practice of medicine doctrines that restrict ownership to licensed physicians, which is why private equity buyers typically use a management services organization structure rather than owning the clinical entity directly.
Considerably. Two practices with identical patient volume can differ by 30% or more in collections depending on the commercial-to-government payer ratio. Buyers underwrite collections, not visits.
There is no single average, because price tracks earnings rather than revenue. At the midpoint multiple of 2.8x SDE, medical practices at $500,000 of SDE sell around $1,400,000, and at $1,000,000 of SDE around $2,800,000. Typical SDE margin in this category runs near 18% of revenue, so a medical practice doing $1,000,000 in revenue would often carry about $180,000 of SDE and land near $504,000.
Take your Seller's Discretionary Earnings and multiply by 2.0x to 3.6x. Where you land inside that band is decided by owner dependence, customer concentration, recurring revenue and the quality of your books. A medical practice at the top of the range looks materially different from one at the bottom, and most of those differences can be improved in the twelve months before a sale.
SDE multiples of 2.0x to 3.6x apply to owner-operated medical practices. Once earnings pass roughly $1M to $2M of EBITDA the buyer pool shifts to private equity and strategic acquirers, and pricing restates onto an EBITDA multiple of 4x to 6.5x. The two are not comparable: SDE includes the owner's compensation and EBITDA does not, so the same business shows a higher SDE multiple than EBITDA multiple.
Typically 9 to 12 months from going to market to closing, assuming financials are ready. Credentialing and payer contract assignment take longer than any other step and cannot be compressed. Start the transfer paperwork the moment an LOI is signed, not at closing.
SDE times the industry multiple. For medical practices that multiple is 2.0x to 3.6x, so $250,000 of SDE points to $500,000 to $900,000. Recorded sales of similar businesses serve as a cross-check, and the equipment and inventory value usually sets the floor.
Yes, at the top of this page. It applies the 2.0x to 3.6x band for medical practices, adjusted for owner hours, margin and years in business, and returns a range rather than one number.
To decide whether to sell a medical practice, a market valuation: what a buyer would likely pay. A certified appraisal is usually needed only for divorce, estate, tax, litigation or a buyer's SBA loan, and costs far more.
Multiples reflect broker transaction data including the BizBuySell Insight Report and aggregated 2024-2025 USA small business sales, and mirror the bands used by the Exit Ready valuation calculator. They are planning estimates, not a formal appraisal, and not investment advice. Market multiples move; this page was last updated 2026-08-19.