Most GP practice sales that disappoint on price share a structural feature that due diligence reliably surfaces: the business does not function independently of the owner. The owner is the primary billing clinician, the decision-maker for operational matters large and small, and the person who holds the key relationships with long-term patients and referring specialists. Buyers know how to read this. They price the risk of losing it into their offer, and they do so conservatively.
A business or a job
When a buyer pays a multiple of EBITDA for a GP practice, they are paying for future maintainable earnings, and the word ‘maintainable’ carries most of the commercial weight. Findex’s buying guide identifies what buyers examine during due diligence:
- financial performance
- patient base stability
- GP and staff retention
- lease terms and operational systems
Each of those items is a test of whether the practice is a transferable going concern or a collection of assets held together by the owner’s continued presence.
A practice with distributed billing across a stable GP team, documented clinical and operational procedures, and administrative management that does not route every decision through the owner gives the buyer something they can model forward with confidence. One where the owner generates a disproportionate share of billings and makes most of the day-to-day decisions does not. Health and Life Accountants make the point plainly: practices that function well without the owner doing most of the clinical work tend to be more valuable. That is a statement about what a buyer can acquire, not a general observation about practice quality.
The three-month test
The most useful diagnostic is this: could your practice run for three months without you, holding its current patient volume and revenue, without anyone needing to call you for operational decisions? Not in a crisis, but under ordinary operating conditions.
Most would answer no, and that is not surprising. GP practice ownership typically develops through gradual, organic growth rather than design. The owner starts as the founding clinician, takes on administrative responsibilities by necessity, becomes the decision-maker by default, and gradually accumulates institutional knowledge that is entirely in their head and therefore not transferable. The remediation steps are well understood: delegating clinical and operational responsibilities, formalising employment and contractor arrangements, ensuring documentation is up to date and accessible, and building a management layer that operates without the owner’s daily involvement. What most owners underestimate is the difference between doing these things incidentally, as part of managing a busy practice, and doing them systematically with sale preparation as the explicit goal.
Retention as a complement, not a substitute
Reducing owner dependency before sale and committing to a structured post-sale retention period are not competing strategies. They address different parts of the buyer’s risk calculation.
Pre-sale dependency reduction improves the multiple the buyer is willing to apply because it changes their assessment of what the earnings are worth without the current owner in place.
Post-sale retention increases further because it provides transition assurance, allowing the buyer to pay for goodwill they cannot fully verify upfront.
In my experience, sellers who commit to a structured two to three-year post-sale transition see premium offers, for the same reason that well-prepared practices command better multiples: each reduces the buyer’s exposure to the central risk in any GP practice acquisition, which is whether the earnings survive the change of ownership.
Neither works on a short timeline. An owner who has spent 18 months systematically reducing their practice’s operational dependence on them, and who enters the sale with a structured retention commitment on the table, is offering the buyer the lowest-risk version of the acquisition. That combination produces the best price. It also requires starting earlier than most GP owners think necessary.
What that looked like in practice
In our case, we identified establishing a branch practice as a pre-sale priority. Our estimate was three years to get it operational and stable, which meant the sale was off the agenda until that work was done. A branch that still depends on the founding GP to function does not add to practice value in a transaction; it adds a question about what happens if that GP leaves.
We also spent time exploring an internal sale and assessing whether our GPs had the capacity and appetite to take on ownership. Internal sales can preserve continuity, but the multiples are typically lower than those for external transactions. If you go that route, make sure your sale contract includes a provision that protects your interest in any subsequent external sale. Without it, you risk subsidising a buyer who later sells to a corporate at a multiple that should have been yours.
If you have a six to ten-year horizon and an opportunity to consolidate ownership shares in the interim, take it. A clean ownership structure reduces due diligence complexity, shortens the transaction timeline and removes a category of negotiation that routinely slows or kills deals. The cost of consolidating early is almost always lower than the cost of untangling it under the time pressure of a sale.