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Taxes are Paid! What Happens Now to Practice Values?

by | Apr 17, 2025 | Insights

The first half of April was one for the record books! I won’t go into the gory details, but the world has changed in two short weeks. Stocks gyrated on record volumes, bonds crashed, interest rates increased and gold set more all-time highs.

You can watch your brokerage account for the values of your liquid assets, but what about your largest and most illiquid single asset; your practice? What is your practice worth today? And how will the “Trump Trauma”, past and future, impact it?

The Clear Reality of Practice Values

Despite prognostications to the contrary, consumers are stressed. Very stressed.

They are late with their car payments at record rates. Americans are paying an average of 28.70% interest on a record level of credit card balances and will soon face higher inflation, in part due to tariffs. None of which is conducive to growing practice collections.

Food, shelter and transportation are more critical than cosmetic dentistry, implants, All on X procedures or adult braces. Many practice values are at risk of declining collections in the coming months and quarters, but fortunately not all.

The IDSOs are Well Financed and there are Plenty of Eager Bidders for Growing Practices

Fortunately, thanks to billions of dollars of financing provided to IDSOs in 2024, many qualified IDSOs continue to bid at high levels for growing practices. One great LPS client this week had nine qualified bids from which to choose the best IDSO partner, at a record value.

The key word is: GROWING! Shrinking practices will not achieve high values, if they can complete an IDSO partnership at all. IDSOs are targeting growing practices only. They would prefer practices with growing collections and growing EBITDA levels. Growth in EBITDA can be challenging with inflation driving up all practice costs.

And growth will become more critical in the balance of 2025 as more doctors decide that liquidity is valuable in troubled times. The IDSOs will have more practices to choose from in 2025 than they did in 2024. They will choose growth over flat or declining.

Many Doctors Who Partnered with IDSOs Over the Last Five Years Have Made Fortunes

Coming on the heels of the Q4 2024 recapitalization of the largest IDSO at a $3.8+ billion-dollar value, three more of the quality IDSOs will complete recapitalizations in Q2 of 2025. Despite the economic storm clouds, well run IDSOs have proven to be attractive investments for over 35 years. That has not changed. In 2024, dozens of happy LPS clients experienced the thrill of seeing their retained ownership increase in value by 300%, 500% and even 1000+%.

Blackrock (the world’s largest asset manager) is considering adding to the four IDSOs they already have investments in today. Sovereign wealth funds and family offices are also considering more IDSO investment. This is all good for values both short and long term.

Yes, today’s higher interest rates have impacted many of the 900 unqualified IDSOs on the LPS Blacklist. Fortunately, there are still 100+ qualified and eager bidders for LPS clients because LPS only has growing clients.

The Why Now, Not Later Question Asked and Answered

  • Q: Are you willing to wait for years to monetize your life’s work if the coming recession reduces your collections/EBITDA in 2025?
  • Q: Will the ongoing adjustment in non-practice asset values be an attractive opportunity to deploy the millions in cash received in an IDSO partnership?
  • Q: Are you getting older? The younger the doctor, the more valuable they are to an IDSO.
  • Q: Will a recession impact your collections and EBITDA and thus practice value negatively?
  • Q: Most importantly, will COVID Earn Outs which pay doctors millions for future growth still be available if you wait?
  • Q: While other asset classes have declined in value, will practice values continue at today’s record levels? We hope so, but hope is not a strategy.

If we have not valued your practice recently, let’s have a conversation about the rewards of IDSO partnership NOW, and the risks of waiting. Complete our Contact Form and we’ll be in touch.

Chip Fichtner
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