The market for physician practices has fundamentally shifted from the peak of 2021. An environment of higher interest rates and economic uncertainty has replaced the era of abundant credit. For physician-owners, this shift underscores a critical reality: Valuation is no longer set by headline multiples but is earned through verifiable proof.
In the current environment, we see buyers and lenders underwriting transactions based on a simple principle: no receipts, no credit. Earnings which cannot be supported are treated as if they do not exist. In practice, buyers assign value only to earnings they can clearly explain, document and reasonably expect to persist under new ownership.
A sell-side quality of earnings (Q of E) analysis is the mechanism for building this proof. It is more than an accounting exercise; it is the financial and operational playbook for your transaction. We follow the revenue cycle from visit, to claim, to payment, to deposit in the bank and ultimately to revenue in the general ledger. We also separate recurring practice revenue and earnings from nonrecurring or one‑time items to present a clear, sustainable earnings picture.
The Diligence-Ready Roadmap: Eight Steps to Proving Your Practice's Value
While all eight areas are important for a smooth process, experience shows that buyer and lender scrutiny centers on two analytical cornerstones: (1) the sustainability of your revenue chain (agreeing dollars from patient visits to the bank) and (2) the quality of your adjusted earnings (proving which earnings persist for a new owner). Our roadmap is designed to build a defensible case for both.
Have any questions? Please contact a member of the Kroll Transaction Advisory Services team.
