Provided by: Jennifer Kirschenbaum, Esq.
September 26, 2019
Why do I keep getting solicitations to my dermatology practice from Private Equity? I'm flattered, but why the interest? And, no thanks!
Yep. Private Equity may be knocking. Pretty soon we'll have a retail option for every specialty it seems. In the market we have seen for the past decade, from my perspective the PE money is a good thing - we have a new market and value infusion into medicine. At what cost? I'm not sure yet. Right now clients I see entering the model are making equal or more money on salary, and also may have an equity grant on the back end that is more than they would ever see at a hospital. Also, some of the platforms I am familiar with are actually very clinically focused - so, that's a plus as well. Certainly before considering a shift to a financially driven model, you have to make sure the vision/culture is a fit for you (or that your compensation and autonomy are where you require for a deal to happen). The only way to do that is to carefully consider any opportunity to jump in. I agree with the skepticism - you should be questioning the interest and any promises of big payouts in exchange for a piece of paper - typically PE will throw out ridiculous numbers, drag you into a never ending diligence process you weren't expecting or experienced with and then you feel to committed to back out when the anticipated numbers change. The process can be excruciating when you sell - to the extent that even the best of us lose sight of main priorities on sale. For instance, you may innocently start the process feeling autonomy is priority 1 - that is very easily traded away, all the time.
Circling back the long way around to the initial question - why are you receiving? Simple - healthcare is stable money right now with a good return. Retail is dead so the spaces are much cheaper and can sustain medical tenants, even in NYC now.
Anyway, if you do decide to look at an offer, let's set a list of priorities as a first step, in writing, and work to preserve through any process.