The Buyer Landscape is Changing

Travis Strack at Lion Business Brokers wrote an excellent article in the IBBA Insights Fall 2025 magazine. Strategic buyers are individuals, private equity firms, and large corporations that traditionally buy healthcare operations $5 million in value or more. Owner-buyers (e.g., practitioners who buy to run the practice) usually buy transactions under $5 million. Market conditions have forced strategic buyers to look for deals under $5 million. The reasons include labor shortages, slowing organic growth, baby boomer retirements, and capital efficiency.

Labor Shortages

Attracting care workers in the healthcare space has been challenging over the past several years. Dentists cannot find enough hygienists to expand their operations. Nurse practitioners are job-shopping and willing to travel to maximize their pay rates. Large medical and dental groups are finding it difficult to expand their client base without the accompanying support staff. They have begun buying smaller practices to access skilled healthcare workers.

Slowing Organic Growth

Maturing healthcare conglomerates are finding that acquisitions offer a fast, more predictable path to scale.

Baby Boomer Retirements.

The volume of baby boomer retirements is creating a surplus of under $5 million transactions.

Capital Efficiency

In an environment of higher interest rates and tight credit, smaller transactions can provide strong returns on investment without substantial debt burden.

Sellers need to adjust how they position their practice to strategic buyers. Instead of focusing on the personal benefits to the new owner, Sellers need to emphasize these features about their practice:

• How the practice enhances the strategic buyer's existing operation,

• Geographic proximity to the strategic buyer's existing operations,

• Recurring revenue,

• Cross-selling opportunities with the strategic buyer's existing client base, and

• Scalable operational systems that can be transferred or absorbed seamlessly.

For example, a small dental practice that refers out root canal procedures can instead internally refer them. Another example is lab work can be performed in the new system instead of sending it out.

Strategic buyers offer a different deal structure than Owner-buyer transactions. Strategic buyers tend to offer all cash deals and bypass the bank underwriting process. The transaction period tends to be shorter since strategic buyers have the infrastructure in place. And earn-outs can be linked to performance metrics related to the integration not just revenue.