The most important number in a practice sale isn’t the offer on the letter of intent. It’s the after-tax figure you personally need to walk away with, and most owners haven’t done that math before they sign.
They know their revenue, their EBITDA, and the multiple the broker floated at dinner. What they don’t know is what those dollars turn into after the deal structure, the taxes, and the life they’ve promised themselves on the other side. That mismatch is where sellers get hurt, and it starts weeks before the closing table.
Here are the myths that practice owners bring into an LOI negotiation that cost them the most, and what to correct before you initial the first page.
Myth: The Purchase Price Is the Number That Matters
The headline price is a marketing figure. What lands in your account is a different number, and that’s the one your retirement plan actually runs on. Two offers with identical top lines can produce wildly different take-home results depending on how the consideration is split between cash at close, rollover equity, seller notes, earnouts, and personal goodwill versus entity goodwill.
Before you countersign anything, work backward from the personal number. Model the taxes on the specific mix the buyer is proposing, subtract the debt you’ll pay off at close, subtract advisor fees, and then compare what remains to the portfolio you’d need to fund your life.
A personal wealth review done before the LOI arrives is worth more than any renegotiation attempted after. Owners who work with a financial planning team that models the deal alongside their long-term plan tend to spot the shortfall while there’s still room to fix it.
Myth: A Higher Multiple Usually Means a Better Deal
Multiples are the seduction of the process. They anchor every conversation and hide almost everything that matters. A practice with steady cash flow and clean books can command a very different figure than a comparable one with concentration risk or a departing lead provider, and the market itself moves year to year.
Median healthcare EBITDA multiples landed at 11.5x in 2025, down from 14.5x the year before, and size matters enormously inside that average: practices under $500,000 of EBITDA average roughly 4.5x, while those above $5 million push past 11x. Chase a headline multiple without knowing where your practice sits on that curve, and you end up disappointed by an offer that was, in context, fair.
Myth: Taxes Are Something Your CPA Handles After Closing
By the time your CPA is reconciling the closing statement, the tax outcome is largely fixed. The choices that drive it, including asset versus stock sale, allocation of purchase price, treatment of personal goodwill, and timing of the close relative to your other income, all get made during LOI negotiation. Push them to the return, and you’ve inherited whatever the buyer’s tax team preferred. A few line items to sort through with your advisors before you sign:
- Ordinary versus capital treatment. How the price gets allocated across equipment, goodwill, non-competes, and consulting agreements decides how much falls at ordinary rates versus long-term capital gains rates.
- The net investment income tax. Applies once modified AGI clears $200,000 single or $250,000 joint, and a practice sale reliably pushes sellers well past those lines in the year of the deal.
- State residency. Where you’re domiciled at close, and where the practice was operated, can each pull a slice. If a move is on the table, its timing is a planning decision, not an afterthought.
- Installment options. Seller notes and earnouts sometimes let you spread recognition across years, smoothing brackets and surtax exposure. Sometimes they don’t. The paperwork decides.
Myth: The LOI Is Non-Binding, So the Details Can Wait
Most of an LOI is non-binding on price. Almost none of what gives you room to push back is. The exclusivity clause, the confidentiality terms, and the expense provisions typically do bind you the moment you sign, and they lock the door on the other buyers you were still talking to last week.
A seller’s negotiating power peaks in the hours before the LOI is signed and drops sharply after. Working capital targets, escrow size, indemnification caps, the scope of the non-compete, and any post-close employment or transition obligations are all easier to shape now than to renegotiate during diligence. Reading the binding provisions carefully with counsel before signing is the last cheap round of the negotiation.
Myth: You’ll Figure Out the Personal Side After the Wire Hits
Sellers routinely postpone estate work, charitable planning, and trust structuring until after the money lands. By then, the appreciation is already in your name and the most efficient moves are off the table. Gifting equity to a trust before a signed LOI is a different transaction than gifting cash after close, and the tax code notices.
The same goes for the boring, personal side of the ledger. A refreshed cash-flow plan, an updated investment policy for the proceeds, a review of insurance that changes the day you stop being a practice owner, and an honest conversation about what you’ll actually do on the Monday after closing are all easier to sort out with months of runway than with a wire confirmation in your inbox.
The number before the sale decides whether the sale was worth doing. Do that math first.
