The Hidden Risks of Unsolicited Offers For Dermatology Practice Owners
Key Takeaways
When an MSO or private equity platform approaches your dermatology practice, the offer is built around one figure: enterprise value, usually a multiple of EBITDA. A practice doing $1M in EBITDA hears “12x, so $12M.” What actually reaches your account is decided by the structure of the deal, not that multiple.
- Enterprise value is not your proceeds. The headline multiple sets the ceiling. What you keep depends on how much arrives as guaranteed cash at close versus earn-out, rollover equity, and escrow. These are the terms your M&A advisor will negotiate before the LOI is signed.
- Earn-outs can be engineered to underpay. Dermatology buyers sometimes set post-sale growth targets you cannot hit once you have handed over control of staffing, payer mix, and spending. At TUSK Practice Sales, we’re analyzing the last three years of performance to set attainable goals for our clients.
- Rollover equity is a second investment, not a bonus. Before you count on it, confirm your liquidity terms, the management fees taken out before distributions, and whether the platform has a real track record of exits in dermatology.
A single unsolicited offer carries no competitive tension. A represented dermatology sale puts qualified buyers in competition, which is what moves value into guaranteed dollars and reveals the partner who genuinely fits your practice.
A dermatology platform calls with exciting news: “Doc, we see what a successful practice you’ve built and would love to purchase your group.” Your practice does $1M in EBITDA, and they offer a 12x multiple on that EBITDA. Twelve million dollars. For a moment, it feels surreal and you’re elated.
But that $12M offer isn’t what you walk away with. What you actually keep depends on how the deal is built underneath it, and that structure is where unsolicited offers quietly give back much of what they promise. A buyer who approaches you directly is counting on one thing: that you read the multiple and skip the mechanics.
How Far a $12M Unsolicited Offer Actually Goes
Take that 12x offer at face value, and you picture $12M landing at close. In practice, an unsolicited offer spreads that value across several buckets, and only one of them is cash in your hand on day one. The rest sits in places you no longer control: a performance-based earn-out, equity rolled into the buyer’s holding company, and an escrow held back against future adjustments. Each is a lever the buyer can pull. None is guaranteed.
Two offers can carry the same headline multiple and be worth very different amounts to the doctor selling.
The Terms That Decide What You Keep
Earn-outs: An earn-out ties part of your payout to how the practice performs after you sell, usually revenue or EBITDA growth over the next two to three years.
The day you sign, you hand over the levers that move those numbers: staffing, spending, fee schedules, hours. We have watched buyers set targets like 20 percent annual growth for three straight years, high enough to inflate the headline and far enough out of reach that the money was never likely to be paid. In a represented process, your advisor pushes those targets back to something achievable and tied to factors you can still influence.
Equity rollovers: Most platform buyers ask you to roll a slice of your proceeds back into equity, either in your own practice entity or in the holding company above it.
Rolling equity when selling your dermatology practice can pay off if the platform grows and exits well. Before you count on it, however, get clear answers on three things:
- Liquidity: how and when are you actually allowed to sell your shares?
- Management fees: what comes off the top for the management company before any distribution reaches you?
- Track record: has this group bought and successfully exited dermatology practices before, or are you their first?
Rolled equity is a bet on someone else’s ability to run and sell a business.
Post-sale compensation: After the sale, your role usually shifts toward clinical work or an advisory seat, and your salary, your production formula, and your hours all become negotiable.
Settle the compensation package with your advisor and your CPA, so your income after the deal matches the life you are planning. For some dermatologists, the sale of their practice is a means for retirement, while for others it could be how you create generational wealth for your family. No matter the purpose of the sale, you should have a clear understanding of what your financial needs are as you transition to being an employee again.
What No Spreadsheet Shows: Your Legacy
A sale is also a decision about what happens to the practice you built. Who leads it. Ensuring a smooth transition for your staff and maintaining the culture they work in. How your patients are treated when your name is still on the door but someone else owns the schedule.
Accepting an unsolicited offer means you’re skipping those questions. Buyers like to move fast and compete on the headline price, not on whether they fit what you built. When TUSK takes a dermatology practice to market, we put established buyers in the same room and let them compete on terms and on fit, not only on price, so you choose the partner instead of accepting the only one who happened to call. You will spend meaningful time with their leadership and connect with their current partners.
Why a Represented Process Improves Your Outcome
One inbound offer is a negotiation with a single buyer who already knows you have no alternative. An advisor changes the picture in two ways: by creating competition, and by reading the structure for the risks you can’t see on your own.
A good sell-side advisor brings multiple offers to the table, weighs them against the others, negotiates the earn-out and rollover terms that quietly move value, and more importantly, allows you to make an informed decision on your timeline. This is all part of the marketed-sales pricess that TUSK Practice Sales run which you can learn more about here. We represent practice owners only. We never work for MSOs (Management Services Organizations) or private equity, so the only interest we protect at the table is yours.
Your Next Step
If an unsolicited offer is already sitting in your inbox, or you expect to sell your dermatology practice within the next 24 months, find out what that offer is worth once the structure is accounted for. TUSK Practice Sales offers complimentary practice valuations with no obligation. Get started with yours today: https://tuskpracticesales.com/educational-resources/free-practice-valuation/
Frequently Asked Questions
Should I accept an unsolicited offer or run a represented sale for my dermatology practice?
At TUSK Practice Sales, we have many practice owners come to us with unsolicited offers, which we improve by 40%+ (net of fees) on average once our advisory team has run a marketed sales process. Running a represented process puts qualified buyers in competition for your practice, allowing you to maximize the valuation and the time savings from negotiating with unserious buyers with no true capital to acquire your practice.
Should I roll equity into the MSO or platform?
Most of the practices that qualify for an MSO or private equity deal will be required to roll a percentage of equity in their sale. Equity can pay off if the platform grows and exits well. At TUSK Practice Sales, we have had several clients receive a meaningful return on their equity from a year after closing their deal to 5+ years. Our team will provide you with a multi-year cash flow analysis so you’re able to map out how the monetization of your equity will impact the total enterprise value of your deal.
How long will I have to keep working after I sell to an MSO or private equity buyer?
Plan on three to five years with most MSO partners, and often five years or more with private equity. Your role, hours, and production formula are all negotiable. TUSK Practice Sales has guided owners through 200+ transactions to terms that fit the life they want after the deal.
