• Eric J. Yetter

Key Findings: Private Equity and Dermatology - 2nd Quarter 2020


Following an in-depth analysis of the key issues surrounding private equity investments in dermatology practices and surgery centers across the United State, we arrived at seven issues potential physician-sellers should know.


Key Findings


  1. Excellent supply and demand fundamentals, new geographies, and dermatology’s relative independence from hospitals suggest private equity will continue to seek partner transactions.

  2. Physician-owners considering a sale to private equity would be wise to act now given the maturity of the consolidation and the fact that transactions typically take 9-12 months to complete.

  3. We are confident investors will give sellers “credit” for the COVID-19 shutdown – adjusting financial performance or looking at other periods when valuing a practice or ASC.

  4. Deals continue to move ahead. Though many are paused, some are still closing now. We expect a return to normal deal volume once more is known about the COVID-19 timeline, and especially once normal clinical operations resume. We are advising physicians looking for a 2021 sale to begin the process now.

  5. Since the third quarter of 2018, our dashboard has signaled a mixed picture of consolidation activity with some KPIs exhibiting expansion while others are more stagnant. We believe a few PE-backed companies will consolidate, and that there will be a resurgence of acquisition activity as physicians evaluate their selling opportunity post COVID-19.

  6. There is a significant level of “anti-private equity consolidation” rhetoric permeating the dermatology vertical and likely reducing sale consideration. We strongly recommend that physician owners pursue a serious fact-based evaluation before dismissing this potentially lucrative window of opportunity.

  7. Based on our detailed tracking and analysis, the dermatology market is only 11.5% consolidated as of this publication. Several key geographies have experienced a relatively low level of investment, yet offer compelling transaction opportunities. They are; 1) the Upper Midwest to Northeast, 2) the Southeast / Mid Atlantic, 3) Texas, Louisiana, Oklahoma and 4) Northern California and the Pacific Northwest


This article is an excerpt from our recently published White Paper: Dermatology and Private Equity State of the Market - Second Quarter 2020


>>> CLICK HERE TO DOWNLOAD WHITE PAPER NOW


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Securities Products and Investment Banking Services are offered through Ashland Securities, LLC. Supervised by the Home Office, located at 80 S.W. 8th Street, Suite 2000 Miami, Florida 33130. Phone Number 305-279-3176. Member FINRA SIPC. Please refer to BrokerCheck for more information about Ashland Securities, LLC. Physicians First and Ashland Securities, LLC are separate and unaffiliated entities.