Case Study

Smaller Practice, Bigger Payday!How Co-Marketing Smaller Practices Can Double Multiples​

Why the Valuation Gap?​

Smaller physician practices typically sell for 3–6x earnings, while larger groups often achieve 8–10x.

What drives the valuation gap?

For smaller practices, the lower multiple often reflects:

  • Heavy reliance on key physicians.
  • Limited scalability and growth potential.
  • Lower profit margins (limited economies of scale).
  • Weaker payor negotiating power.
  • Higher operational and management risk.

Conversely, larger practices garner higher valuations due:

  • Diversified revenue and patient base.
  • Scalable infrastructure for growth.
  • Stronger profit margins.
  • Greater leverage with payors.
  • Robust management teams and systems.
  • Strategic value to buyers (market presence).
  •  

Want to maximize your practice's value?

  • Unlocking higher valuations starts with understanding and addressing these key drivers.

Want to Maximize Your Practice’s Value?​

Understanding these drivers is the first step.

By strategically addressing areas like operational efficiency, revenue diversification, growth initiatives, and provider stability, you can position your practice for a higher valuation when the time comes.

It takes many years to scale a practice.

If your practice has less than $2.0M in Earnings (EBITDA) and you want to maximize your valuation, the answer may be in Co-Marketing.

What is Co-Marketing?

When two or more smaller practices go to market together, the impact can be significant. For example, two practices each generating $1.0M in earnings can combine to form a $2.0M earnings profile, often resulting in a 50–100% higher valuation compared to going it alone.

The goal: 1 + 1 = 3

By joining forces, you create a more attractive investment opportunity with scale, diversification, and enhanced buyer appeal.

The next few pages will describe this in greater detail.

Key Qualities Buyers Are Willing to Pay a Premium For​

Geographic Proximity:​

The various practices are strategically positioned within the same or a closely concentrated geographic area.

Referral Strength:​

The involved practices share the same specialty or possess strong patient referral networks.

Financial Strength:​

The collective saleable EBITDA of the involved practices is >$2.0M.

Management Stability:​

The involved practices have high-quality management teams committed to remaining in place after the transaction.

System Compatibility:​

The involved practices utilize the same or largely similar EMR and billing systems.

Physician Alignment:​

The physicians form a cohesive, stable group committed to the success of the practice.

Operational Efficiency and Scalability:​

Low risk. High margins. Strong, repeatable operational performance with scalable infrastructure.

Revenue Diversification:​

More services. More payors. More resilient and predictable earnings.

Growth Potential:​

Credible, actionable growth strategies already in motion showing a path to increasing earnings.

Types of Co-Marketing Campaigns Explained​

Standalone:

  • A single small physician practice is marketed independently, typically less than $2.0M in EBITDA.
  • Without the size, scale, or strategic leverage of a larger group, standalone practices typically command lower valuation multiples.
  • Typical multiples: 3–6x Earnings (sometimes lower if there are risk factors or limited buyer interest).
  • Harder to attract strategic buyers or private equity at premium platform pricing without additional value drivers.

Co-Marketed Deals:

  • Instead of marketing a practice alone, multiple practices are bundled together into a “platform opportunity” to appear more attractive to buyers, which can dramatically lift valuation multiples.
  • The strength of the combined group determines whether it’s classified as StrongGood, or Weak:

Strong Co-Marketing Case​ (Highest Multiples)​

  • All or Most “Key Qualities” Are Present:
    • Concentrated geographic region.
    • Same specialty or strong referral synergies.
    • Combined earnings $2.0M EBITDA or higher.
    • Strong management teams willing to stay post-transaction.
  • Buyers’ Interest : High interest across multiple buyers; likely bidding competition.
  • Valuation Outcome : Highest multiples (similar to true platform deals).

Good Co-Marketing Case​ (Moderate to High Multiples)​

  • Most of the “Key Qualities” Are Present:
  • Maybe slightly weaker geography overlap, or some variation in management quality, but the practices still have strong synergy.
  • Buyers’ Interest: Good level of buyer interest; multiple offers likely but with more diligence.
  • Valuation Outcome : High multiples, though slightly below Type I.

Strong Co-Marketing Case​ (Highest Multiples)​

  • All or Most “Key Qualities” Are Present:
    • Concentrated geographic region.
    • Same specialty or strong referral synergies.
    • Combined earnings $2.0M EBITDA or higher.
    • Strong management teams willing to stay post-transaction.
  • Buyers’ Interest : High interest across multiple buyers; likely bidding competition.
  • Valuation Outcome : Highest multiples (similar to true platform deals).

Types of Co-Marketing Campaigns Explained:​ More attributes from page 5 usually translates to better multiples​ ​

Types of Co-Marketing Campaigns Explained:​More attributes from page 5 usually translates to better multiples

Inside the Numbers: What Our Case Studies Reveal​ Data-Backed Results Across 25+ MHA Clients​

Observations:

Co-marketing of different practices into a single platform, rather than running independent processes, can significantly increase the purchase price multiple for each practice.

Notes:

  1. Sample set includes 25+ co-marketing eligible healthcare companies that engaged Merritt Advisory between 2021 and 2025.
  2. The sample set has an aggregate transaction value that exceeds $500M.
  3. EBITDA figures are rounded to the nearest $50K.
  4. Each co-marketing syndicate in the sample comprises between 2 and 7 distinct companies.

The Bottom Line: Co-Marketing = Higher Value​

On average, properly co-marketed practices with ~$2.0M or less in EBITDA on an individual company basis, achieved valuation multiples that were 50–100% higher than comparable standalone deals.

Standalone = Lower multiples.


Co-Marketing = Higher multiples, BUT the quality of the grouping (Strong, Good, or Weak) determines how high.

Healthcare Investment Banking

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With over $6 billion in client transactions, MHA drives profitability and real-world operational improvements.

About Merritt Healthcare Advisors

Merritt Healthcare Advisors (“MHA”) is focused exclusively on representing owners of middle-market healthcare businesses that are considering strategic options, whether it is selling an interest in their organization, creating a new partnership, or growing through acquisition. MHA is unique in that we are the only firm that combines an investment banking background with actual “owners” experience that comes from developing and managing our own healthcare facilities. We have used this experience to successfully complete more than $5 billion in transactions on behalf of our Clients. As the industry’s leading Mergers and Acquisitions (“M&A”) firm, our proven process and extensive buyer network enable us to help our Clients realize the absolute best financial and non-financial outcomes. The Principals of Merritt acted in their capacity of licensed investment banking agents of Burch & Company, Inc., member FINRA/SIPC. For additional information about Merritt Healthcare Advisors, please visit www. merrittadvisory.com

Richard Searles: rsearles@merrittadvisory.com

Jay Pruzansky: jpruzansky@merrittadvisory.com

Chris Carlesi: ccarlesi@merrittadvisory.com

Peter Colgan: pcolgan@merrittadvisory.com

Federico Giraldo Delgado: fgiraldo@merritadvisory.com

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