The dermatology M&A market in 2025 has entered what many call a “golden age.” For owners of large dermatology groups, this moment represents a uniquely favorable environment—but like all consolidation cycles, timing and structure will ultimately determine outcomes.

The Current Landscape: Historic Valuations and Competitive Bidding

Top-tier dermatology practices are selling at high multiples of EBITDA with a mix of upfront cash, rollover equity, and favorable employment terms. Practices with multiple providers, diversified revenue streams (including aesthetics), and clean financials are commanding the strongest offers.

A key driver of these elevated multiples is competitive tension. With few scaled platforms compared to other healthcare verticals, large dermatology deals often attract multiple bids, creating leverage for sellers to negotiate not only price but also structure, timeline, and cultural fit.

Lessons From Other Healthcare Consolidation Cycles

The path dermatology is on is well-worn. Over the past two decades, private equity has reshaped industries such as:

• Veterinary – which saw a rush of private equity platforms that eventually compressed multiples as competition shifted from aggressive bidding to operational efficiency.
• Ophthalmology and Physical Therapy – where early sellers often captured the highest returns, while late entrants faced lower valuations as markets matured.

The owners who sold in these other markets while conditions were positive had the luxury of choice—the ability to explore multiple groups, weigh competing offers, and align with the partner that was truly the best fit both financially and culturally. Dermatology owners today have that same opportunity to ensure they’re finding an aligned partner.

Who’s Driving Demand?

Three buyer profiles dominate today’s dermatology market:

1. Private Equity Groups Seeking Platforms – These buyers are willing to pay a premium for large practices that can serve as a cornerstone for building a new MSO. For owners of sizable groups, platform deals often deliver the highest valuations and most favorable structures.
2. PE-Backed MSOs in Expansion Mode – Once a platform is established, buyers aggressively acquire add-on practices to grow scale. For large dermatology practices, alignment with the right MSO can create immediate liquidity and long-term upside, especially if the MSO is nearing recapitalization. For owners who are seeking to slowly step away from the clinical side, this is a great fit, as is for owners who want to offload the operational burdens.
3. Doctor-to-Doctor Sales – While more common for smaller dermatology practices under $2M in revenue, these deals still play a role. They tend to be simpler and quieter, but they lack the competitive tension and upside potential of institutional capital.

The Importance of Deal Structure: Protecting the “Second Bite”

One of the most powerful wealth-building opportunities in dermatology practice sales comes from the second bite of the apple—when a private equity-backed platform recapitalizes and original sellers with retained equity receive another payday.

But this upside is only realized when:

• Rollover equity is structured correctly
• Dilution protections are in place
• Sellers align with a platform that has long-term financial health and growth potential

Without these safeguards, practice owners risk walking away with little to nothing at recapitalization.

 

Risks That Could Shift the Market

While 2025 remains highly favorable, external factors could impact valuations in the near future:

• Interest Rate Volatility – Higher borrowing costs could reduce buyer aggressiveness.
• Capital Gains Tax Changes – A potential sunset of the 2017 Tax Cuts and Jobs Act in 2026 may increase tax exposure on sale proceeds.
• Regulatory and Political Shifts – Greater scrutiny on private equity in healthcare could change deal dynamics.
• Economic Softening – If the economy trends toward recession, capital flow and buyer sentiment may tighten.

What This Means for Large Dermatology Practices

For owners of multi-location or high-revenue single-location dermatology groups, the window to maximize value and terms is open now. With buyers competing for limited high-quality assets and platforms still forming, dermatology practices are uniquely positioned to achieve career-defining outcomes.

But success requires more than timing—it requires the right strategy, structure, and advisory team. Choosing an experienced dermatology M&A broker ensures you not only secure the highest valuation, but also protect long-term upside and avoid common pitfalls.