For many dermatologists, it’s natural to focus on the numbers you can compare with your colleagues when you sell your practice, such as the multiple and the cash at close, and overlook everything else around it.
Consider buying a home. You would not choose one only because it had the right number of bedrooms and bathrooms. You would ask about the roof, the HOA, and the schools your children will attend. The sale of your practice deserves the same scrutiny, if not more. The multiple is one important part of the deal, and no single term can tell you whether the deal as a whole is right for you.
The Multiple Doesn’t Tell You the Whole Story
You likely know the math behind selling: EBITDA multiplied by a multiple equals the purchase price. EBITDA is earnings before interest, taxes, depreciation, and amortization, adjusted for items like your own compensation, and the multiple is the number a buyer applies to it. But the stack of papers that comes with an offer can run inches thick, because the multiple is only a couple of lines on a page of it. The other terms can matter just as much.
The multiple cannot tell you how much of the price reaches you, when it arrives, or what you commit to in exchange. Those answers sit in the terms, first laid out in the letter of intent (LOI), the written offer that sets the main points before formal agreements are drafted. They are easier to discuss at that stage than later.
How Do Deal Structure and Rollover Equity Change What You Receive?
Suppose your LOI values your practice at $4 million. You will not receive $4 million in cash at closing. Typically, 20 to 40 percent of that value is held back as rollover equity, which is ownership you keep in the MSO, or as an earnout, a payment you receive only if the practice meets agreed targets. Both come with terms that decide how and when you can turn that value into cash.
When you allocate a portion of the value in the form of rollover equity, you are reinvesting instead of taking in cash, so you keep an ownership stake in the MSO or its parent company. If the MSO is later sold or restructured, your stake converts to cash. Treat it as an investment, not a payment. Its value depends on factors you do not control, such as the MSO’s debt and how long an exit takes, and you generally cannot sell it on your timeline.
What is Your Role After Your Partner with an MSO?
Most dermatology groups are selling to an MSO, or a management services organization, which provides the business infrastructure behind a practice, such as billing, HR, and purchasing.
As you review the LOI and negotiate with the MSO, look closely at what your role will be after the sale. For many dermatologists, selling does not mean they stop being clinicians. You continue caring for patients while your new partner takes over much of the operational work. For first-time sellers, that shift is often the biggest adjustment, and it helps to know in advance what stays with you.
That means understanding your compensation and benefits, and how many years you are expected to stay on after the sale. It also means knowing which clinical decisions remain yours, such as protocols, supervision of PAs and NPs, and hiring. Finally, ask about the non-compete, which limits where and for how long you can practice if you leave the MSO. If you decide one day to practice independently again, what does that look like? Your attorney should review it, since enforceability varies by state.
If you are growth-minded, ask how the growth you create is credited to you. If you add providers, open locations, or acquire practices, rollover at the parent-company level means that growth is shared across the whole platform. Some MSOs offer JV equity, a joint venture structure that ties your ownership to your practice where your growth happens. Ask every MSO: if I grow this, how does that show up for me?
Finding the Partner and the Deal That Fit You
There is no best deal in the abstract. The right one fits your goals, your practice, and the life you want afterward. Settle a few questions first: liquidity now or continued upside, how many days a week you want to practice, and what would make the next five years feel like a good decision.
TUSK has advised on more than 200 transactions totaling over $1.5 billion, and every transaction is different. Educating practice owners on the value of their business is one piece of the puzzle we help solve, but we’re also there to walk owners through the many other aspects that will shape your exit.
Selling a dermatology practice is a financial event and a personal one. Make the decision that will best position you for success and peace of mind.
Frequently Asked Questions
What is the difference between rollover equity and JV equity?
The difference between rollover equity and JV equity is what your retained ownership is tied to. Both are a stake you keep after the sale. Rollover equity is tied to the MSO or its parent company, so its value follows the performance of the whole platform. JV equity is tied to your own practice, so its value follows how that practice performs.
How much clinical control does a dermatologist keep after selling to an MSO?
Most dermatologists will retain full clinical control after a sale. As you begin to transition out of the practice, you may be required to mentor or pass down responsibilities to associates in the practice.
