#Private Equity #Dermatology Practice #TUSK Practice Sales

What's Driving Dermatology Practice Sales in 2025 and the 2026 Outlook

As dermatology practice owners contemplate the possibility of selling their practices, they're finding themselves in one of the most favorable market conditions in recent history. With high buyer demand, limited competition, and an influx of institutional capital, we are witnessing what many industry experts describe as a "golden age" for dermatology mergers and acquisitions (M&A).

TUSK Practice Sales, a prominent broker specializing in the sale of physician-owned dermatology businesses, provides insights into the current valuation landscape, buyer dynamics, and crucial considerations for dermatology owners looking to enter the market.

Current Market Conditions

Kevin Cumbus, the Founder and President of TUSK Practice Sales, observes that dermatology valuations are reaching heights comparable to other mature healthcare sectors, such as dentistry. He explains that this moment is particularly significant due to the emergence of the second wave in the dermatology consolidation cycle. This wave is marked by increased private equity investments leading to heightened competition, aggressive bidding, and more favorable deal terms for sellers willing to present their practices effectively.

Historically, different healthcare specialties, including dental care, physical therapy, and even veterinary medicine, underwent similar transformations driven by private equity involvement. Now, dermatology is entering this consolidation phase, which presents numerous opportunities for sellers contemplating a practice sale.

Benefits for Sellers

As platforms take form and scale in the dermatology space, early sellers are often in advantageous positions when their partners recapitalize—essentially exiting the investment to new investors. Such situations can provide substantial financial benefits, provided the initial terms allowed for rollover equity and were strategically aligned from the start.

Ryan Mingus, Managing Director and Partner at TUSK, emphasizes that TUSK has successfully negotiated smart equity positions that deliver significant upside while safeguarding against potential downsides. However, he warns sellers to conduct thorough due diligence to avoid unfavorable outcomes, where sellers may end up with nothing post-recapitalization due to poor initial agreements.

Buyer Profiles Shaping the Market

The dermatology M&A landscape in 2025 can be characterized by two primary types of buyers:

1. Private Equity Groups: These groups are on the lookout for well-established dermatology practices to serve as foundational platforms for broader Management Services Organizations (MSOs). Such platform acquisitions typically offer the highest valuations and most advantageous terms, establishing the initial foundation for significant investments.

2. PE-Backed MSOs: Following the establishment of a platform, sponsors often pursue add-on acquisitions to scale operations efficiently. These MSOs are typically well-capitalized and capable of compelling offers to practices that align with their operational and clinical goals, allowing sellers to gain liquidity while retaining clinical independence.

Additionally, Doctor-to-Doctor Transactions still play a role, particularly for smaller practices with revenues under $2 million. These transactions can provide straightforward exit options for owners looking to transition out of their businesses without the complexities that larger deals often entail.

Key Trends to Watch

• - Valuations at Historic Peaks: High-performing practices often see EBITDA multiples ranging from 5x to 10x, influenced by various factors such as cosmetic revenue streams and financial clarity.
• - Seller Advantages in a Competitive Market: With fewer significant players in dermatology compared to other healthcare sectors, practices are receiving multiple offers, giving sellers leverage in negotiations for price and terms.
• - A Shift Toward Younger, Strategic Sellers: More dermatology practice owners in their 40s and 50s are now opting for sales to alleviate operational burdens or to explore growth opportunities within larger corporate frameworks.
• - **Opportunities for