When owners compare offers for a practice, the conversation tends to begin and end with the headline number. The habit is understandable, but the headline is only half the deal. How the number is actually paid, what conditions attach to each piece of it, and what the agreement says about your working life afterward is the other half — the half an owner feels every day once the transaction closes.
Two offers of identical total value can differ enormously. One may pay most of it in cash at close. The other may pay a portion now, make some of the rest contingent on the practice's future performance, and deliver the remainder as equity in a company you do not control and cannot readily sell. Neither structure is inherently wrong. But they are not the same deal, and treating them as interchangeable is the easiest mistake to make when term sheets begin to arrive.
Cash at close, and everything after
The clearest way to read a structure is to sort every dollar into one of two columns. Cash at close is paid when the transaction completes. It is yours regardless of what happens to the practice, the acquirer, or the market afterward. Everything else is a deferred component: value that arrives later, or conditionally, or in a form you cannot sell when you choose. Deferred components commonly include rolled equity, earnout payments, seller notes paid over time, and amounts held in escrow against the representations made in the agreement.
A deferred dollar is not the same as a dollar at close. It carries conditions, timing, and someone else's performance between you and it. The first question to ask of any offer is not “what is the total?” but “how much is certain at close — and what has to go right for the rest?”
Equity rollover
In many acquisitions, the owner is asked to roll over part of the purchase price: to take a portion of the practice's value not in cash but as an ownership stake in the acquiring platform. Acquirers like rollover: it keeps the selling physician economically invested in the practice's continued performance, it reduces the cash required at close, and it signals to the acquirer's own investors that the physicians believe in the platform.
The honest owner's view has two sides. The appeal is the possibility of a second payout: if the platform itself is later sold, rolled equity is sold along with it, and that second sale can be meaningful. But it is a possibility, not a schedule. Until such a sale occurs — if it occurs — the equity is illiquid. There is generally no market on which to sell it, no ability to choose your own timing, and its eventual value depends entirely on how the platform performs and whether it finds its own buyer.
If rollover is part of an offer, three sets of questions matter more than the percentage:
- What class of equity is it? The same class the platform's principal investors hold, or a junior class that sits behind other holders' preferences — meaning others are paid first when the platform is sold?
- What governance comes with it? Do you have voting rights, any board representation, or at minimum the right to regular financial reporting — or are you a silent minority holder in a business you cannot see into?
- What happens if you leave? If you retire, become disabled, die, or depart before your commitment period ends, can the platform repurchase your equity? At what valuation, determined by whom?
Earnouts
An earnout ties part of the price to future performance: if the practice meets defined targets over a defined period after close, additional payments are made. Earnouts can be reasonable. When a seller and buyer honestly disagree about near-term performance — a recently hired physician still building a schedule, a new service line not yet reflected in the financials — an earnout lets the results settle the disagreement.
They become something else when the targets depend on decisions the owner no longer controls. After close, the acquirer may control staffing, billing, scheduling, and payer contracting — the very levers that determine whether the targets are met. An earnout measured on those outcomes quietly shifts the acquirer's execution risk onto the owner's purchase price.
An earnout tied to metrics you control is a bridge over an honest disagreement. An earnout tied to metrics the acquirer controls is a discount you may never see restored.
The details deserve the same scrutiny as the amount: how each metric is defined, who calculates it, under whose accounting conventions, and whether you have the right to review the calculation.
The employment agreement
For most physician-owners, a transaction does not end their working life; it restructures it. The employment terms are the part of the deal you will live inside daily, and they deserve the attention the price gets.
- Length of commitment. How many years are you agreeing to practice after close, and on what terms could you reduce your schedule?
- The compensation reset. As an owner, your income has likely combined clinical compensation with the practice's profits. After close, those profits belong to the buyer — that is part of what was purchased — and compensation typically resets to a salary or a productivity formula. Understand that reset in plain numbers before comparing any offer's headline value.
- Productivity models. Where compensation is formula-based on measured clinical output, understand how the output is measured, what assumptions sit underneath it, and how the formula behaves if scheduling, staffing, or payer mix changes around you.
- Non-competes. Read the geography, duration, and scope as one question: what would your professional life look like if the arrangement does not work out?
Staff and autonomy
Some operational change after an acquisition should be expected. Billing and collections usually move to the platform's central team. Purchasing consolidates toward platform vendors. Administrative functions — payroll, HR, IT — centralize, and practice managers often see their roles change most.
Other things can be negotiated. Owners frequently seek clinical autonomy provisions — contractual language keeping clinical decisions with the physicians — and key-staff commitments, under which named employees are retained for a defined period. These are worth pursuing, and worth pursuing honestly: they are negotiable points, not guarantees. A provision is worth what its drafting actually says and what the platform's conduct honors. Some of the most useful diligence available to an owner is a candid conversation with physicians who joined the same platform two or three years earlier.
Where your own advisors matter most
Structure is where an owner's own attorney and accountant prove their worth. The questions above — equity classes, earnout definitions, repurchase rights, the tax character of each component — are precisely the questions experienced deal counsel and a good accountant exist to answer, and nothing in this briefing substitutes for their advice on your specific situation.
Meradale helps independent physician-owners understand what today's market means for a practice like theirs — and, only when and if they choose, makes discreet introductions to vetted acquirers. Part of that work is simply this: helping an owner understand what they are looking at before the conversations with counsel begin. If that would be useful — whether an offer is on your desk or purely hypothetical — a private conversation is where it starts, and it carries no obligation.