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5 Important Things Healthcare Practices Should Consider When Exploring Private Equity Relationships

Balancing Growth and Values: Decoding Private Equity Dynamics for Healthcare Practices

Written by: Aaron Michael Buch

Exploring Equity Relationships

Medical practices may consider working with private equity firms in order to access capital, expand their services, or achieve other business goals. However, partnering with private equity can be a complex process with many factors to consider. Here are some things that healthcare practices should consider before working with private equity:

1. The terms of the deal: It’s important for medical practices to carefully review the terms of the deal with the private equity firm, including the amount of capital being invested, the ownership structure of the practice, and the exit strategy. Practices should work with a lawyer or financial advisor to ensure that the terms of the deal are fair and in the practice’s best interests.

2. The goals of the private equity firm: Private equity firms may have different goals and priorities than the healthcare practice. It’s important for practices to understand the private equity firm’s goals and how they align with the practice’s own goals.

3. The impact on the practice’s culture: Partnering with a private equity firm can lead to changes in the culture and operation of the practice. Medical practices should consider how these changes may impact the practice’s staff, patients, and overall culture.

4. The private equity firm’s track record: It’s important for healthcare practices to research the private equity firm’s track record, including their investment history and any past partnerships with healthcare organizations. This can help practices to understand the firm’s expertise and how they may approach working with the practice.

5. The long-term plan: Medical practices should consider their long-term plans and how partnering with a private equity firm may impact them. This can include factors such as the practice’s growth goals, future ownership structure, and succession planning.

By considering these factors, healthcare practices can make informed decisions about whether to work with private equity and ensure that any partnership aligns with the practice’s goals and values. It’s important for practices to seek the advice of professionals, such as lawyers and financial advisors, to ensure that all aspects of the partnership are properly addressed.

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