Private Equity Investment in Urology Practices

Overview

Driven by regulatory efforts, market forces, and major structural changes, growth and consolidation has dominated U.S. health care for more than a decade. From hospital systems and insurance providers to physician practices ranging from dermatology to dentistry, all corners of the health care market are experiencing investment and buyouts, with more and more large superregional and national platforms being established. Urology is very much part of this trend.

While investment in the urology sector is not new, private equity’s targeted focus on this specialty gained traction during 2020 and has only accelerated since. Urology practices share many characteristics with other physician specialties that have experienced successful consolidation waves. For example, there is significant fragmentation, coupled with imbalances between provider supply and patient demand.

In 2021 private equity groups made more than 10 large investments in various urology platforms around the U.S. Private equity buyers are eager to acquire the consistent cash flow and growth potential that specialty practices like urology can provide. During a time of uncertain investment returns all of us at Physician Growth Partners expect this interest to only increase.

Our team has successfully guided several urology practices through the private equity process. There are several steps that we take to ensure successful outcomes for our clients, these include:

• Develop the appropriate financial modeling to position maximized cash flow and “credit” for ongoing initiatives that are driving growth
• Determine the right mix of buyer (including both strategic acquirers and private equity groups) and outreach strategy
• Managing buyer marketing, bid solicitation, and negotiation
• Position the client to meet relevant potential buyers with strong offers that address fit, strategy and alignment
• Manage the transaction process to maximize leverage with potential buyers
• Negotiate key economic and structural deal terms, leveraging PGP experience within the urology specialty
• Facilitate all due-diligence pre-closing to ensure a seamless process that does not take away from the day-to-day business while ensuring the highest probability for a successful close
• Maximize financial results for shareholders while maintaining clinical autonomy