California medical practice sales have evolved with the rise of MSO (management services organization) consolidators, hospital-system acquisitions, and PE-backed specialty platforms. Each buyer type has distinct deal structure, pricing, and physician transition expectations.
Buyer landscape
MSO/PE consolidators (most active in dermatology, ophthalmology, gastroenterology, orthopedics), hospital systems acquiring referral primary care, individual physician buyers (typically using SBA for primary care, cash for specialty), and physician partnerships expanding.
Multiples and structures
Primary care: 4x–7x EBITDA, often with hospital-system or physician buyer. Specialty practices: 5x–10x EBITDA for PE/MSO acquirers, often with structured earn-outs and 3–5 year physician employment commitments. ASC ownership trades at premium multiples.
Pre-exit prep
Two years of clean P&Ls. Payor mix breakdown (PPO/HMO/cash/Medicare/Medicaid). Patient base documentation with active patient counts. Physician compensation analysis (especially compared to MGMA benchmarks). Lease assignment review. Staff retention plan.
California-specific considerations
Corporate Practice of Medicine doctrine — non-physicians cannot own medical practices in CA, requiring MSO structures. Medical Board license transfer process. Anti-kickback (Stark) compliance review. Employee vs. contractor classifications. CMA (California Medical Association) compliance review for any solicitation.
Process timeline
MSO/PE deals close in 4–7 months from initial outreach. Hospital system acquisitions take 6–12 months. SBA-financed individual buyer deals close in 5–9 months including underwriting.
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