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LPS Closed $153+ Million of IDSO Partnerships in July

by | Aug 5, 2024 | Insights

The little advisors and the doctors trying “Do It Yourself” Investment Banking are all challenged in closing transactions in 2024. But once again, size and insider knowledge matters for high value IDSO partnerships.

LPS completed over $153,000,000 (one hundred and fifty-three million dollars) of IDSO partnerships for GPs and specialists in July with seven different IDSOs in seven states. More importantly, over $50 million of these IDSO partnerships were valued at over 10x EBITDA.

Yes, some LPS clients were larger, rapidly growing practices, but we achieved extraordinary values in partnerships as small as $3.0 million in value with NONE under 7.0x EBITDA. Client owner doctor’s ages ranged from 34 to 73.

LPS Knows How to Find the Best IDSO Partners and Provides Clients with Multiple Qualified Bidders!

The July partnerships were completed for GP, pedo, ortho pedo/ortho and OMS. Cash vs. equity component bids ranged from 51% to 80% cash at close. One large transaction at over 10x was for a practice with over 25% of their collections from government payers.

Notably, many of the July partnerships were completed with newer and smaller IDSOs that are not well known yet, but that is where the upside in future equity value resides if you choose wisely.

One GP client recently (Q2 24) became the platform practice for a newly formed IDSO at over 11x EBITDA. The IDSO is funded by a large, healthcare only, PE firm with multiple IDSO creation success stories. Huge ground floor equity upside for the doctor.

Timing is Always Important

Doctors should completely understand the value of Earn Outs in an IDSO partnership today. You may get to
lock in today’s record multiples of EBITDA and have them applied to your future growth in the one, two or even three years after closing an initial partnership. These structures are golden opportunities for any practice that is growing.

Considering the macro-economic and geopolitical landscape today, (especially TODAY, August 5th) the option of cash in the bank at low tax rates with a strong, silent partner should seriously be considered NOW,
not later. Smart traders sell into rallies, not after they have passed.

P.S. Unlike the little advisors, LPS is audited by one of the largest accounting firms in the world. You can’t make this stuff up!

Chip Fichtner
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