Pros
- Upfront liquidity event in the form of a tax-advantaged purchase.
- Strong potential for tax-deferred “roll-over” equity participation.
- Incentive and alignment mechanisms for practice physicians’ post-transaction.
- Cost Savings and operational efficiencies through back-office consolidation.
- Improved performance through better practice infrastructure, access to capital and private equity management expertise.
Cons
- Loss of ownership and control of business aspects of practice
- Normalization in compensation to physician owners based on multiple factors.
- Strategic decision-making may be influenced by the investment timeline and other priorities.
- Partnership exploration and execution process can be time-consuming, burdensome, and distracting.
How to determine if there is the right PE backed firm for your group
- Fit of Potential Partner – evaluate as many perspective partners as possible and consider cultural fit, track record, and specialty expertise.
- Ensure that the PE platform can enable both your junior and senior partners to realize their goals.
- Evaluate as many qualified and likely potential partners as possible with the understanding that there is no obligation to move forward unless you find the right one.
- Creating a competitive process will always enable you to realize the best outcome.
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