Selling a gastroenterology practice to private equity

Where private equity stands in gastroenterology in 2026

Roughly 1 in 10 gastroenterologists now works in a private equity backed group, according to Becker's in October 2025. That is lower than dermatology, but GI has produced the single biggest physician platform exit in the specialty world. In January 2025, GI Alliance sold 73 percent of itself to Cardinal Health for $2.8 billion, which valued the whole company at about $3.9 billion. The same month, US Digestive Health sold to SCA Health, the surgery center arm of Optum. Other national platforms include Gastro Health, One GI, Allied Digestive Health, and United Digestive. A platform is the anchor practice a sponsor builds around; smaller practices join it as add-ons at lower prices.

Those two exits define the top of the market, and they went to strategic buyers rather than to other private equity firms. That is the pattern across healthcare in 2026: mega-exits to companies like Cardinal, Cencora, McKesson, and Optum at high multiples, while ordinary PE-to-PE recapitalizations have become scarce. The physicians who rolled equity into GI Alliance or US Digestive Health in the late 2010s got their second bite. The question for you is whether the platform buying your practice today will find a buyer like that in 8 to 10 years, which is how long holds now run.

Deal flow slowed well before the exits. GI private equity deals fell from 26 in 2022 to 13 in 2023, and physician practice deals across all specialties fell 18 percent in 2025 and roughly in half in the first six months of 2026. Buyers are still active in GI, but they are adding practices to existing platforms and pushing more of the price into rollover, earnouts, and holdbacks. The research on what changes after a sale includes GI directly. Singh and colleagues, in JAMA Health Forum in September 2022, studied 578 acquired dermatology, GI, and ophthalmology practices and found charges per claim rose 20 percent, allowed amounts rose 11 percent, and new patient visits rose 38 percent. Singh and Zhu, in Health Affairs Scholar in April 2024, found that 51.6 percent of practices acquired from 2016 through 2020 were resold within three years, almost always to another PE firm.

What a gastroenterology practice is worth to a platform

Buyers price the practice as a multiple of EBITDA, your yearly profit before interest, taxes, depreciation, and amortization, after paying every physician a market salary. The buyer's EBITDA is smaller than your take-home because it subtracts the compensation it plans to keep paying you. The scrape page shows how that number is built.

These are indicative ranges from FOCUS Investment Banking's November 2025 review and other sell-side trackers, not quotes. GI multiples run higher than dermatology or dental because of the ASC. Public healthcare services companies traded at a median of about 11.5 times EBITDA in 2025, down from 14.5 times in 2024, which pulls on private prices too.

The endoscopy center is the center of the valuation. A practice that owns its ASC captures the facility fee on every procedure, and a platform can route procedures from other physicians into your center, so the buyer sees growth it can control. Owned anesthesia services and an in-house pathology lab raise the price for the same reason. Provider count matters because a group of eight gastroenterologists does not depend on any one of them, and a payer mix with strong commercial screening volume is more valuable than a Medicare-heavy one.

Prices fall for a practice that performs its procedures in a hospital and owns no facility, because the buyer is pricing professional fees alone. They fall for an ASC held in a joint venture with a hospital or with outside physicians whose consent is required to sell. They fall for a group whose senior partners are near retirement, because the buyer will discount procedures that will need a replacement physician, and for owner add-backs that the quality of earnings review rejects.

The deal terms gastroenterologists typically see

The baseline is about 70 percent cash and 30 percent rollover, and 60 to 70 percent cash with 30 to 40 percent rollover is the common range. Rollover equity is the portion of your price you take as shares in the management company instead of cash. Buyers in 2025 and 2026 have pushed more of the price into rollover, earnouts, holdbacks, and seller notes, so plan on less cash at closing than the deals your colleagues signed in 2021. The rollover equity page covers the waterfall, the preferred return that sits ahead of you, and how the shares are treated if you retire or leave.

The scrape is typically 20 to 30 percent of practice profits, according to the Commonwealth Fund's April 2026 report, and your upfront check is largely a multiple of that forgone income. After closing, base salary is typically 40 to 50 percent of total compensation, down from 60 to 80 percent before, with the rest paid on work relative value units at reported rates of $40 to $70 per unit. For a gastroenterologist, the larger change is often not the salary but the ancillaries. ASC distributions, anesthesia company profits, and pathology lab income that you received as an owner typically move to the platform. Income repair, which means getting your pay back toward pre-sale levels through growth and bonuses, is a promise, not a guarantee.

Employment agreements run at least three years with a clawback of part of the lump sum for early departure, and five-year terms are common. Non-competes are universal, and the sale-of-business carve-out survives even where a state restricts employment non-competes. Ask exactly which entities you will hold equity in after closing, because some deals leave physicians with a stake in the local ASC while others roll everything into the parent. The glossary defines each of these terms.

Tax issues specific to gastroenterology

The tax pillar covers the general rules. A GI sale usually involves several entities sold at once, and each one has its own tax character.

The ASC interest

Most endoscopy centers are LLCs taxed as partnerships, often with several physician owners. Your ASC interest is sold under its own agreement with its own purchase price allocation. Selling a partnership interest is capital gain except for your share of hot assets under Section 751: cash-basis receivables and depreciation recapture on scopes, processors, and monitoring equipment are ordinary income no matter how the deal is papered. If the ASC is being sold to the platform along with the practice, insist that it be valued separately at a facility multiple rather than blended into an add-on price for the professional entity. The buyer usually gets a stepped-up basis in the center's assets through a Section 754 election, which is worth something to it and should be worth something to you in the negotiation.

Scopes and endoscopy equipment

Endoscopes, processors, and video towers are expensive and were probably written off under bonus depreciation or Section 179. Gain on each item up to the depreciation you took is ordinary income under Section 1245 at up to 37 percent federal, and Section 453(i) puts that recapture in the year of sale even if part of the price is paid later. Bonus depreciation is now permanent at 100 percent for property acquired after January 19, 2025, and the Section 179 limit is $2.5 million. California never conformed to bonus depreciation and caps Section 179 at $25,000, so your California recapture will differ from the federal figure.

Anesthesia and pathology entities

If your group owns an anesthesia company or a pathology lab in a separate entity, each is a separate sale. The entity type sets the tax result. An S corporation anesthesia company sold through an F-reorganization gives capital gain on the cash and deferral on any rollover; a partnership lab carries Section 751 ordinary income on its receivables and equipment. The F-reorganization page explains the structure buyers use for S corporations.

Real estate

If the group owns the building that houses the practice or the ASC, it is usually kept in its separate entity and leased to the platform. That keeps the building's depreciation recapture out of the sale and adds rental income, but rent above market lowers the EBITDA the buyer is pricing, so the lease is part of the negotiation.

Personal goodwill and the non-compete

Gastroenterology referral relationships tend to belong to the group rather than to one physician, so personal goodwill is available less often than in dermatology, but it can still apply to a physician with a distinct referral base who has no employment agreement or non-compete with the practice entity. The allocation to your covenant not to compete is ordinary income at up to 37 percent, and moving $2 million from goodwill to the non-compete costs roughly $300,000 or more in additional federal tax for the same price.

Reimbursement and regulatory headwinds to price in

Medicare cut ASC endoscopy reimbursement by roughly 8 percent on average for 2026. Because the ASC is where most GI value sits, that cut lands directly on the part of your business the buyer values most. Every buyer will rerun your center's 2026 revenue at the new rates, and the EBITDA you are selling will be lower than your 2025 return suggests. Do that math yourself before the quality of earnings review does it for you.

The state and federal picture is also moving. California's SB 351, effective January 1, 2026, bars private equity groups from interfering with clinical judgment, payer contracting, and coding in physician practices, and voids non-compete and non-disparagement clauses inside management contracts while leaving sale-of-business non-competes valid. Fourteen states now require advance notice of healthcare transactions, and Oregon's SB 951, effective January 1, 2026, is the most restrictive MSO law in the country. Texas SB 1318, effective September 1, 2025, caps physician employment non-competes at one year and five miles. The FTC dropped its national non-compete rule on September 5, 2025 and formed a Healthcare Task Force on March 20, 2026, so enforcement is now case by case. The Texas and Florida pages cover the two no-income-tax states, and the California page covers the 13.3 percent rate and the notice rules.

Who should not sell right now

• A gastroenterologist who does not own an ASC and is being offered an add-on price on professional fees. You would be selling the least valuable part of a GI practice at the lowest multiple in the specialty, and signing a non-compete that keeps you from building a center later.
• A group whose ASC is in a joint venture that cannot be sold without the hospital's consent. Until that is resolved, the buyer is pricing the practice without the asset that drives the multiple.
• A physician 15 or more years from retirement. You give up 20 to 30 percent of profit and your share of ASC, anesthesia, and pathology income for a career, in exchange for one payment and a second bite that now takes 8 to 10 years.
• A group with a single offer at 7 times when national platforms sold at 14 to 18 times months earlier. The buyer is keeping the gap. The should I sell page covers how to run a competitive process.

If you already sold and the ancillary income you counted on has moved, the already sold page is the place to start.

What to do next

1. Rerun the ASC at 2026 rates

   Apply the roughly 8 percent average cut to your center's endoscopy revenue and recompute EBITDA before you respond to any offer.

2. List every entity and how each is taxed

   Practice, ASC, anesthesia company, pathology lab, and real estate each have a different tax character. Know which carry Section 751 ordinary income and which you will keep.

3. Model the after-tax cash

   Use the after-tax proceeds calculator with a realistic rollover share, the scrape, your equipment recapture, and your state's rate.

4. Compare and get a review before exclusivity

   The specialties hub shows how GI compares to the other specialties we cover. The allocation, the ASC valuation, and the employment terms can all still change until the letter of intent is signed.