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The Bridge
UPDATES & INSIGHTS
FOR THE LOWER MIDDLE MARKET
A QUARTERLY PUBLICATION
OF THE M&A SOURCE
Chair’s Letter
The Five Things Buyers
Look for When Acquiring
a Medical Practice
Understanding Valuation:
Why Every Business Owner
Must Learn the Rules Before
Selling Their Company
»
»
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NO.14
2 | The Bridge | Summer 2026
Updates + Insights
for the Lower Middle Market
The Bridge | Summer 2026 | 3
Content.
NO.14
ISSUE
SUMMER 2026
The Bridge
A QUARTERLY PUBLICATION
OF THE M&A SOURCE
LETTER FROM
THE CHAIR
Reflect on the success of the 2026 Spring
Conference in Minneapolis, where the
M&A Source community gathered to
strengthen education, relationships,
and new opportunities.
04
UNDERSTANDING VALUATION:
WHY EVERY BUSINESS
OWNER MUST LEARN THE
RULES BEFORE SELLING THEIR
COMPANY
Explore the fundamental rules
of business valuation in order
to better navigate risk, understand
deal structures, and more.
06
THE FIVE THINGS BUYERS LOOK
FOR WHEN ACQUIRING A MEDICAL
PRACTICE
Learn the five key factors buyers look
for in a medical practice, and how to use
them to maximize value.
12
4 | The Bridge | Summer 2026
Chair’s Letter
Every time I attend an M&A Source conference,
I'm reminded that the true strength of this
organization isn't found in a single session,
speaker, or event. It's found in the members
who show up, engage, and invest in one
another's success. The Spring Conference
in Minneapolis was no exception.
One of my favorite parts of every conference
is seeing new connections being formed and
existing relationships strengthened. While
education remains a cornerstone of M&A
Source, the conversations that happen between
sessions, at networking events, and around
the Deal Market often become just as valuable.
Those interactions are where opportunities are
uncovered, partnerships are developed, and
deals begin to take shape.
The conference also reinforced something that
has been true throughout my time as a member:
M&A Source delivers its greatest value when
education, relationships, and practical resources
come together. Our members are constantly
looking for ways to better serve their clients,
make informed decisions, and create successful
outcomes in an increasingly competitive market.
With that in mind, I'm excited about the addition
of a new member benefit through our partnership
with GF Data. Access to meaningful market
intelligence and transaction data has become
increasingly important for advisors and investors
alike. This partnership provides members with
another valuable resource to help support
valuation discussions, market analysis, and client
conversations.
As we continue moving forward, I remain focused
on ensuring M&A Source delivers meaningful
value to its members, not only through
conference, but also through resources that help
members succeed in their businesses every day.
Thank you for your continued engagement
and support of M&A Source. I look forward to
seeing how our members continue to leverage
the strength of this community to create
opportunities, close deals, and make an impact.
Jaclyn Ring
M&AMI, CM&AP
Jaclyn Ring
2026 Chair, M&A Source
Thank you for your continued engagement
and support of M&A Source. I look forward
to seeing how our members continue to
leverage the strength of this community to
create opportunities, close deals, and make
an impact.
Dear Friends and Colleagues,
The Bridge | Summer 2026 | 5
Fall Conference
& Deal Market
2026
SAVE THE DATE
LEARN MORE & SUBMIT
NOVEMBER 2-4
HOUSTON, TX
JW MARRIOTT
HOUSTON BY
THE GALLERIA
150 Westheimer Rd
Houston, TX
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Proposal for a Chance
to Share Your
Expertise at the
Fall 2026 Conference
DEADLINE: JULY 15, 2026
6 | The Bridge | Summer 2026
Understanding Valuation: Why Every
Business Owner Must Learn the Rules
Before Selling Their Company
MOST BUSINESS OWNERS SPEND DECADES BECOMING EXPERTS IN THEIR INDUSTRY. THEY
UNDERSTAND OPERATIONS, SALES, CUSTOMER SERVICE, AND HOW TO SURVIVE DIFFICULT
ECONOMIC CYCLES. YET WHEN IT COMES TIME TO SELL THEIR COMPANY, MANY DISCOVER THEY
ARE ENTERING AN ENTIRELY DIFFERENT WORLD, ONE GOVERNED BY INVESTMENT BANKERS, PRIVATE
EQUITY FIRMS, ATTORNEYS, ACCOUNTANTS, AND PROFESSIONAL ACQUIRERS.
By Dr. Allen Nazeri
DDS, MBA
The Bridge | Summer 2026 | 7
The reality is that a business owner does not need
to become an investment banker to achieve a
successful exit. However, they do need a fundamental
understanding of valuation. Without it, owners risk
leaving significant money on the table, accepting
unfavorable deal structures, or walking away from
excellent opportunities because they misunderstand
how buyers assess value.
Understanding valuation is one of the most important skills a
business owner can develop long before they decide to sell.
Understanding Valuation Starts with Understanding Risk
One of the biggest misconceptions among business
owners is that valuation is determined solely by revenue or
profitability.
While financial performance is important, sophisticated
buyers are actually purchasing future cash flow and
evaluating the risk associated with achieving that cash flow.
The lower the perceived risk, the higher the valuation
multiple.
The higher the perceived risk, the lower the valuation
multiple.
Why Two Companies with Similar EBITDA Can Have
Different Valuations
Consider two companies generating $2 million in EBITDA.
One company has:
• Diversified customers
• Strong management team
• Recurring revenue
• Clean financial statements
• Documented processes
• The second company has:
• Customer concentration
• Owner dependence
• Inconsistent financial reporting
• High employee turnover
• Limited scalability
Despite producing identical EBITDA, the first company may
command a valuation that is several million dollars higher
than the second.
Understanding valuation means understanding how buyers
evaluate risk.
Understanding Valuation Beyond EBITDA Multiples
Many owners become fixated on EBITDA multiples.
They hear that a competitor sold for 8x EBITDA and
assume their company should receive the same valuation.
Unfortunately, valuation is far more nuanced.
The Myth of Industry Multiples
Industry averages provide useful benchmarks, but they
rarely tell the complete story.
Buyers examine:
• Growth rate
• Customer retention
• Competitive advantages
• Market position
• Technology infrastructure
• Scalability
• Management depth
• Regulatory exposure
Each of these factors can materially increase or decrease
enterprise value.
Why Premium Valuations Are Earned
Premium valuations are rarely awarded because of size
alone.
They are earned through preparation, operational
excellence, and strategic positioning.
The companies receiving the highest multiples are often
those that spent years building transferable value before
going to market.
Understanding Valuation and Deal Structure
One of the most overlooked aspects of valuation is deal
structure.
Many business owners focus exclusively on headline
purchase price while ignoring how the transaction is
structured.
8 | The Bridge | Summer 2026
Not All Offers Are Created Equal
An offer may include:
• Cash at closing
• Seller financing
• Earn-outs
• Rollover equity
• Working capital adjustments
• Performance incentives
A lower headline offer with superior terms may ultimately
produce a better financial outcome than a higher headline
offer with unfavorable conditions.
Enterprise Value Versus Net Proceeds
Sophisticated sellers understand that enterprise value and
net proceeds are not the same.
Factors such as debt payoff, transaction expenses, taxes,
working capital requirements, and post-closing obligations
can significantly impact the amount ultimately received.
Understanding valuation requires understanding the
complete economic picture.
Understanding Valuation from a Buyer's Perspective
Professional buyers complete acquisitions regularly.
Many business owners only sell one company during their
lifetime.
This creates a natural experience gap.
What Buyers Are Really Buying
Buyers are not purchasing your past.
They are purchasing:
• Future earnings
• Future growth
• Future scalability
• Future market opportunities
The more confidence buyers have in future performance,
the more aggressively they are willing to compete for your
company.
Creating Competitive Tension
Valuation is often determined by market demand rather
than mathematical formulas.
A single buyer may establish a price.
Multiple qualified buyers create competition.
Competition creates leverage.
Leverage creates premium valuations.
Understanding Valuation Years Before an Exit
The best time to learn about valuation is not when you
receive an offer.
It is years before entering the market.
The Five Value Drivers Every Owner Should Focus On
1. Revenue Growth
2. EBITDA Growth
3. Customer Diversification
4. Management Team Development
5. Recurring Revenue Expansion
Improving these areas often produces a significantly
greater return than attempting to negotiate a higher
multiple at the eleventh hour.
Understanding
valuation is one of the
most important skills
a business owner can
develop long before they
decide to sell.”
The Bridge | Summer 2026 | 9
The Bridge | Winter 2025 | 9
The Q2 2026 Market Pulse Survey
is open through July 15
Learn more and participate to gain access to exclusive
participant benefits.
GET STARTED
Q1 2026 Highlights
‹$500K
$500K-$1M
$1M-$2M
$2M-$5M
$5M-$50M
ENTERPRISE VALUE OF MARKET SEGMENTS STUDIED
MAIN STREET
LOWER MIDDLE MARKET
$1M-$2M
$5M-$50M
$500K-$1M
$2M-$5M
‹$500K
Q1 2023
Q1 2024
Q1 2025
Q1 2026
2.5
2.5
2.8
2.8
4.5
3.5
5.1
3.5
BUSINESS VALUE
MULTIPLES IN Q1 2026
REPORTED IMPACT OF AI ADOPTION
ON BUSINESS VALUATIONS
"AI is definitely part of the discussion, but it hasn’t translated into value yet.
Buyers want to understand how it’s being used, but unless it’s clearly
l bili
i ’
Ri h
0%
10%
20%
30%
40%
50%
60%
70%
No material impact
Too early to determine
Slightly increasing value
Slightly decreasing value
67%
15%
12%
3%
10 | The Bridge | Summer 2026
Value Engineering Your Business
The most successful exits are rarely accidental.
They result from intentional planning and value
engineering.
Owners who systematically reduce risk, improve
profitability, and create scalability position themselves for
substantially better outcomes when they decide to sell.
Understanding Valuation Is Understanding Your
Options
Valuation is not simply a number.
It is a reflection of risk, opportunity, growth potential,
and market demand.
Business owners do not need to become investment
bankers. They do, however, need to understand enough
about valuation to ask the right questions, recognize a
credible offer, and avoid being disadvantaged by more
experienced buyers.
The owners who achieve the best outcomes are not
necessarily the smartest operators. They are the ones
who prepare early, educate themselves, and surround
themselves with advisors who understand
the complexities of mergers and acquisitions.
Understanding valuation may be the single most
important step in transforming decades of hard work
into lasting wealth.
Dr. Allen Nazeri
DDS, MBA
Allen@pexits.com
Certified M&A Professional
Program Virtual Fall 2026
»
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September 22, 2026 - October 20, 2026
This program was developed by the faculty of
the Coles College M&A Academy and is focused
on the special interests of M&A intermediaries
serving private companies in the middle market and
business owners preparing for acquisition or sale.
The Bridge | Summer 2026 | 11
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12 | The Bridge | Summer 2026
The Five Things Buyers Look for
Before Acquiring a Medical Practice
By Jim Lobel
HOW OWNERS CAN MAXIMIZE VALUE BEFORE GOING TO MARKET
FOR MANY PHYSICIANS AND HEALTHCARE ENTREPRENEURS, SELLING A MEDICAL PRACTICE
REPRESENTS THE CULMINATION OF YEARS—OR EVEN DECADES—OF HARD WORK. WHETHER
MOTIVATED BY RETIREMENT, BURNOUT, A DESIRE TO PURSUE OTHER OPPORTUNITIES, OR SIMPLY
THE CHANCE TO CAPITALIZE ON A STRONG MARKET, THE SALE OF A PRACTICE IS OFTEN ONE OF THE
MOST SIGNIFICANT FINANCIAL EVENTS IN AN OWNER'S PROFESSIONAL LIFE.
The Bridge | Summer 2026 | 13
Yet many practice owners make the mistake of assuming
that a profitable business will automatically attract buyers
and command a premium valuation. Today's buyers are far
more sophisticated than they were a decade ago. Private
equity firms, healthcare systems, physician groups, and
strategic investors conduct extensive due diligence before
making an offer. They are looking beyond revenue and
patient volume to assess operational strength, scalability,
compliance, and long-term growth potential.
The good news is that owners who understand what buyers
value most can often improve both the attractiveness and
valuation of their practice before ever entering the market.
Here are the five factors that matter most.
1. Financial Performance Is Still King
Nothing influences a practice's value more than its financial
performance.
Buyers want to see a business that generates consistent
revenue, healthy profits, and predictable cash flow. They are
not purchasing a history lesson; they are investing in future
earnings.
One of the first metrics investors review is EBITDA—earnings
before interest, taxes, depreciation, and amortization.
EBITDA provides a clearer picture of operating performance
by removing accounting and financing variables. In many
healthcare transactions, valuation is expressed as a multiple
of EBITDA, making profitability a critical driver of purchase
price.
Just as important as profitability is the quality of financial
reporting. Buyers expect at least three years of organized
financial statements, including profit-and-loss statements,
balance sheets, and cash flow reports. Sloppy bookkeeping
immediately raises concerns about management quality and
business risk.
Many sellers also focus on charges when they should
focus on collections. In healthcare, charges often bear
little resemblance to what a practice actually receives
from insurers and patients. Sophisticated buyers pay close
attention to collection rates because collections represent
real cash entering the business.
They also evaluate payer mix carefully. A practice with a
balanced mix of commercial insurance, Medicare, Medicaid,
and self-pay patients is often viewed more favorably
than one heavily dependent on a single reimbursement
source. Commercial insurance typically produces higher
reimbursement rates, while excessive dependence on
government programs may limit profitability.
At the end of the day, buyers trust numbers. The more
accurate, transparent, and consistent those numbers are, the
more confidence they will have in the business.
2. Operational Excellence Creates Buyer Confidence
A practice that depends entirely on its owner is often worth
less than one that operates efficiently through documented
systems and processes.
Buyers want evidence that patient care, scheduling, billing,
staffing, compliance, and revenue cycle management
function smoothly regardless of who owns the business.
They are seeking an organization, not a job.
Operational excellence starts with systems. Modern
electronic medical records, standardized workflows,
employee training programs, compliance protocols, and
strong quality controls all contribute to a more attractive
acquisition target.
Revenue cycle management deserves special attention.
Delays in insurance collections, excessive claim denials, or
inconsistent billing practices can significantly impact cash
People remain among
the most valuable assets
in any healthcare
organization.
14 | The Bridge | Summer 2026
flow and reduce value. Buyers know that a dollar billed is not
the same as a dollar collected.
Patient satisfaction is another increasingly important metric.
Online reviews, referral patterns, retention rates, and
community reputation provide valuable insight into how well a
practice serves its market.
The most desirable businesses are those that continue to
perform well even when the owner is away. When buyers
see an operation that functions efficiently without constant
oversight, perceived risk declines and valuation often
increases.
3. Strong Teams Increase Practice Value
People remain among the most valuable assets in any
healthcare organization.
Experienced physicians, nurse practitioners, physician
assistants, office managers, and administrative personnel
create continuity and stability. Buyers recognize that
replacing key employees after an acquisition can be difficult,
expensive, and disruptive.
A stable workforce with low turnover demonstrates
effective leadership and organizational health. It also
reassures buyers that patient care and operations are
unlikely to suffer during a transition.
One of the most significant trends in healthcare today is
the growing utilization of nurse practitioners and physician
assistants. These providers are increasingly responsible for
managing a large percentage of routine patient encounters
while operating under physician supervision where required.
From a business perspective, the economics can be
compelling. Mid-level providers often deliver excellent care
for common conditions while helping practices improve
access, expand operating hours, and increase patient
throughput at a lower cost than physician-only staffing
models.
For buyers, a well-balanced provider mix can represent both
operational efficiency and future growth potential.
The Bridge | Summer 2026 | 15
Equally important is the presence of capable leadership
beyond the clinical staff. Practices that rely exclusively on
the owner for management decisions often face transition
challenges. Conversely, organizations with experienced
administrators and managers tend to inspire greater buyer
confidence.
The stronger the team, the smoother the transition and the
greater the perceived value.
4. Growth Potential Drives Premium Valuations
Current performance is important, but future opportunity
often drives premium valuations.
Investors want to know where the business can go, not just
where it has been.
Practices that have clear and achievable growth opportunities
frequently command higher multiples because buyers believe
they can unlock additional value after the acquisition.
Growth opportunities can take many forms:
• Expanding operating hours
• Adding new service lines
• Recruiting additional providers
• Increasing occupational medicine contracts
• Improving digital marketing
• Opening satellite locations
• Expanding telemedicine offerings
• Serving underserved patient populations
Location also plays a major role. Practices situated in growing
communities with favorable demographics, strong employer
bases, and limited competition often attract heightened buyer
interest.
Strategic value can further increase valuation. A practice
that fills a geographic gap for a healthcare system or creates
synergies for a larger organization may be worth more than
its financial performance alone would suggest.
Owners should be prepared to present a credible growth
story supported by market data, demographic trends, and
realistic assumptions. Buyers are not interested in fantasies,
but they are willing to pay for opportunity.
In many transactions, future growth potential is what
separates a good offer from an exceptional one.
5. Preparation Determines Success
Perhaps the biggest misconception in healthcare mergers
and acquisitions is that preparation begins when the
decision to sell is made.
In reality, the best time to prepare a practice for sale is often
two or three years before entering the market.
Preparation begins with an honest assessment of the
business. Owners should identify weaknesses and address
them before prospective buyers discover them during due
diligence.
Areas requiring attention often include:
• Financial reporting
• Compliance documentation
• Provider contracts
• Facility appearance
• Equipment maintenance
• Licensing and accreditation
• Employment agreements
• Payer contracts
• Operational inefficiencies
Due diligence has become increasingly rigorous. Buyers
routinely examine financial records, compliance programs,
contracts, litigation history, billing practices, employee
matters, and operational performance. Any surprises
discovered during this process can reduce valuation or
derail a transaction entirely.
Professional advisors can make a significant difference.
Experienced healthcare M&A advisors, attorneys,
accountants, and valuation specialists help owners prepare
for scrutiny while maximizing value and minimizing risk.
Confidentiality is equally important. Premature disclosure
can create anxiety among employees, patients, referral
sources, and competitors. Most successful transactions are
marketed discreetly to carefully qualified buyers through a
structured process.
16 | The Bridge | Summer 2026
Preparation not only increases value but also shortens
timelines and reduces the likelihood of unpleasant surprises.
The Bottom Line
There are many reasons owners decide to sell a medical
practice. Some are ready to retire. Others are seeking
liquidity, facing partner disputes, pursuing new opportunities,
or simply looking to step away from the daily demands of
ownership.
Whatever the motivation, the same principle applies: buyers
invest in businesses that demonstrate strong historical
performance and a promising future.
They want clean financials, efficient operations, stable teams,
regulatory compliance, and credible growth opportunities.
They want confidence that the business they are acquiring
can continue to succeed long after the transaction closes.
The owners who achieve the best outcomes understand
this reality and prepare accordingly. They view their practice
through the eyes of a buyer and make improvements well
before going to market.
Selling a medical practice is not unlike selling a home. The
better prepared and presented the asset, the more likely it is
to attract qualified buyers and command a premium price.
In today's market, sophisticated investors can quickly identify
weaknesses during due diligence. They can also recognize
well-managed organizations with strong fundamentals and
substantial upside.
For practice owners contemplating an eventual exit, the
message is straightforward: get your house in order before
you put it on the market.
The time invested in preparation today can translate into
a higher valuation, smoother negotiations, and a far more
successful transaction tomorrow.
To receive a free, detailed White Paper on this topic, contact:
Jim Lobel
jlobel@ahcteam.com
The Bridge | Summer 2026 | 17
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