Find answers to commonly asked questions below. If you would like more information please contact us. We are more than happy to chat with you!
How is my practice valuation determined?
The primary metrics for determining your practice's valuation are the earnings (EBITDA) that are associated with both your practice and your ambulatory surgery center (if applicable). Based upon your EBITDA profile, growth potential and practice scale you can expect a multiple to be paid on those earnings. It is very difficult to predict the multiple but on a very broad average 5x to 10x is most common with options to defer some of this capital into the new private equity entity/venture you would now become a part of. In Private Equity deals, size isn't as important as profitability.
Will the new private equity partner strip down my practice? My staff? Etc...
No. Consistent with our intent to only align you with private equity groups that are specific to eye care providers, our private equity partners are not intrusive to your existing operations. Your practice name will not change, your staff is not cut, you are not told what surgical products or equipment to use and you have enormous input as to what is best to continue growing your business. This is the difference in having Pegasus represent your interests versus attempting to go it alone.
What is the strategic growth model after the acquisition of my practice?
Make no mistake, this is a growth driven acquisition model. Surgeons on the cusp of retirement or just trying to unload their practice are not good acquisition targets. We seek progressive minded eye care providers who want to do more surgery (ophthalmologists) and focus less on the administrative challenges that incumber them from organic growth. There are different tactics that are employed to drive patient volume growth to you, your partners and your practice.
If I sell my practice do I have to take part of my distribution in stock?
In most situations you will be expected to defer part of your distribution into private stock of the new entity you joined. This is to ensure that your interests are aligned with your capital partner’s interests. Being a shareholder post-acquisition also allows you to enjoy future potential liquidity events making your total investment worth even more.
Why would I want to invest part of my buyout into the new company's stock?
Private equity usually follows a very predictive 'turn cycle' whereby practices are acquired and are rolled into the new corporate entity (typically). In what is usually a 4-5 year acquisition process of adding practices, that new entity is then sold to another private equity group but is paid at a higher multiple of earnings than what your initial payout was when you joined. It's another bite at the financial apple downstream which is a great benefit.
What makes Pegasus Equity Advisors different from an investment banker?
Investment bankers typically have no expertise in ophthalmology. Ask them the differences between an O.D. a D.O. and an M.D. and you will see. Most investment bankers represent several clients among several different medical specialties and to countless buyers. Much of what they do is akin to asking a realtor to list and sell your home. Who buys the home is of little concern, so long as the price is right. Pegasus Equity Advisors sees this as a flawed model for ophthalmologists and optometrists. We understand that this isn't a transaction, this is a partnership. Doctors who allow investment bankers to just sell to the highest bidder soon become statistics as to the negative press that often accompanies private equity. Ours is exclusive to eye care only. Our leadership is comprised of industry experience with eye care companies like Alcon, Bausch & Lomb and J&J Vision. Who better to understand the dynamics of optometric co-management, the effect of conversion rates to upgraded cataract procedures and the things that drive a lasik franchise?
What services does Pegasus Equity Advisors offer?
We are a modern brokerage firm that is aligned with only proven ophthalmology & optometry friendly suitors. Conventional practice brokers and investment bankers will "shop you" to the first buyer - regardless of whether it is a fit or not. We do not subscribe to this method. We are a firm that believes our value is in the private equity partners we have vetted that do only ophthalmology and/or optometry deals. We navigate the entire process including negotiating buyouts with buyers on your behalf and consistent with what is important to you as a client. After an initial meeting with you to understand your business vision and expectations, our internal financial analyst team will determine your purchasable EBITDA (valuation). From here we make the introduction to our select private equity partners that are best aligned with your practice and future goals. We manage the entire process from initial discovery, to financial diligence, negotiation and subsequent earnings audit all the way until close which could last between 6-12 months depending on many factors. We communicate frequently to our clients during this time so that the transaction is smooth and complete. Most importantly, we represent YOUR interests during the process and not the buyer.
What does it cost?
We charge $0 for performing your initial practice valuation analysis. If after a lengthy conversation and discussion around your valuation potential, and setting of expectations, we charge our clients the following. Pegasus Equity Advisors charges either an initial one-time retainer or a nominal monthly fee to get the deal started (depending on deal size/type). If we are successful at transacting you to a buyer, there is a 'success fee' paid at the end that is a percentage of the total transaction value. The amounts and ranges vary from deal to deal depending on the scope and size of the deal. We have no financial interest or gain from the acquiring private equity group and only represent the interest of our clients in a transaction.
How do I get started if I am interested in learning more?
Simple. Click on CONTACT at the top of this page then fill out our client intake form. Or, you can send us an email directly