Seller guide
Private Equity in Dermatology: How Platform Deals Work
Dermatology was one of the first specialties private equity consolidated. Here is what a platform offer really contains.
Short answer
Private equity dermatology platforms usually buy a majority of a practice through a management company, value it on adjusted EBITDA after a reduction in physician pay, and pay part of the price in rollover equity. The headline multiple matters less than four things: cash at closing, the size and terms of the rollover, any earnout, and how much income you give up after the sale.
Why dermatology attracted private equity early
Dermatology combines steady medical demand, high-margin procedures like Mohs surgery, in-house pathology, and cash-pay cosmetic services. It is also fragmented, with many small independent practices. That mix made it one of the first specialties investors built platforms in, and dermatology deals remain common.
The compensation scrape: where the price really comes from
In a typical platform deal, physicians agree to take lower pay after the sale. The difference becomes earnings the buyer can value. ECG Management Consultants describes the price in typical private equity deals as "a multiple of the normalized historical EBITDA" after a physician compensation reduction of about 20% to 30%.
In plain terms, you are selling part of your future income for a payment today. That trade can be very attractive, but it should be measured over the full length of your employment agreement, not just at closing.
What else is in the offer
| Term | What it means for you | Reported ranges |
|---|---|---|
| Cash at closing | Money you receive when the deal closes | About 70% of value in one advisor's typical structure (Northstar, Dec 2025) |
| Rollover equity | Proceeds reinvested in the platform | About 20% to 40% (Axia Growth, Oct 2026) |
| Earnout | Price tied to future revenue or retention | About 10% to 20% over 12 to 24 months (Breakwater, Sep 2026) |
| Employment agreement | Your role, pay and term after the sale | Often several years, with a non-compete |
How unequal partners get treated
In a group, partners rarely produce or earn equally, so a uniform pay cut affects them differently. ECG notes this as a common source of conflict and describes personal-goodwill sales as one tool to balance it. Agreeing how proceeds and pay cuts will be split before you talk to buyers avoids a fight in the middle of a deal.
What platforms look for in a dermatology practice
- Several dermatologists and advanced practice providers who will stay.
- In-house Mohs surgery and dermatopathology.
- A strong medical base with cosmetic revenue on top.
- Locations in markets the platform wants, with room to add providers.
See how size changes the multiple in our dermatology practice valuation guide.
Questions to ask before you sign
- What is my total payout over the employment term, including the pay reduction?
- How is my rollover equity valued, and when could I sell it?
- Exactly what triggers the earnout, and who controls the things that drive it?
- What do the non-compete and termination terms say?
- Who makes clinical decisions after the sale?
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Get a Free Practice ValuationCommon questions
What is a compensation scrape in a dermatology practice sale?
It is the reduction in physician pay after the sale that creates the earnings the buyer values. ECG describes typical reductions of about 20% to 30%.
Do private equity dermatology deals include rollover equity?
Usually. Advisory firms report rollover of roughly 20% to 40% of deal value in physician-practice transactions.
Is private equity the best buyer for every dermatology practice?
No. Solo dermatologists and physicians close to retirement sometimes do better selling to another dermatologist or a regional group with a simpler structure.
Related reading
Sources
Figures are attributed to their source and date. Ranges are published estimates, not a valuation of any practice.
- ECG Management Consultants, "Unlocking Value: The Role of Personal Goodwill in Physician Practice Deals," 2025. Link
- Northstar Financial Advisory, "Selling to Private Equity," December 1, 2025 (as quoted in search results). Link
- Axia Growth, "Physician Practice & MSO M&A," October 3, 2026 (as quoted in search results). Link
- Breakwater M&A, "Healthcare Practice Valuation Multiples 2026," September 20, 2026 (as quoted in search results; broker publication). Link
- CT Acquisitions, "Who Buys Dermatology Clinics? Private Equity Dermatology 2026," updated June 6, 2026 (broker publication). Link