MSO (management services organization) valuations

searcher profile

May 24, 2021

by a searcher from University of California, Los Angeles - UCLA Anderson School of Management in 230 Rose Ct, Campbell, CA 95008, USA

I'm looking at a pure-play healthcare MSO business that services IPAs, independent physician practices, and physician groups. Has anyone transacted in this space? What kind of valuations are these businesses currently trading at?

2
15
170
Replies
15
commentor profile
Reply by an investor
from New York University in New York, NY, USA
Hi It is really hard to get a general valuation with MSO's in healthcare because so much is dependent on the field of medicine the clients / Dr's are in (PT, Pain management, diagnostic testing) along with their model (cash, in vs out of network,). Also the strength of the relationship between existing MSO and their clients is huge factor.

I have seen offers of 2x net revenue up untll 3.5, but that is just the ones I have seen, but so many variables.
commentor profile
Reply by a searcher
from Clemson University in New York, NY, USA
I have been involved on the both the buy side and sell side of MSO transactions and the EBITDA multiple depends heavily on the space/specialty and ongoing relationship with the providers the MSO serves. I have seen as low as 4x and as high as 11x. There have been recent transactions with higher multiples by a large strategic when they were able to get control of a large/dominant group in a strong market.
commentor profile
+13 more replies.
Join the discussion