M&A activity snapshot
Healthcare private equity is running on two tracks. At the top of the market, global healthcare PE set a new record in 2025 with an estimated $191 billion in deal value, and investors announced 445 buyouts, the second-most on record. Those figures are Bain's global estimates across all healthcare segments.
Provider deals grew in value but not in count. Bain reports that provider and related services deal value jumped 57% to an estimated $62 billion in 2025, while volume remained flat. It adds that pure provider investment did not see the same acceleration as provider IT and services.
At the practice level, activity is contracting. PitchBook data reported by Fierce Healthcare shows PE healthcare deals down almost 19% in Q2 2026 versus Q2 2025. The same data puts 2026's deal count on track to be down 26.5% from 2025, which would be the lowest annual count PitchBook has seen since 2017.
Physician practice management (PPM), historically the largest roll-up category, has fallen furthest. PitchBook counted 851 PPM deals in 2021 and just 105 in the first half of 2026. Quarterly, there were 71 PPM deals in Q2 2026, compared to 89 in Q1 and 102 in Q4 of 2025. The two counts come from separate PitchBook releases. They do not reconcile: 89 plus 71 is 160 for the half (Axia arithmetic on the Advisory Board figures), not 105. Neither article explains the gap, so treat both as directional evidence of a steep decline rather than exact counts.
Who is buying
PE-backed management services organizations (MSOs) and dental support organizations (DSOs) remain the core buyers of independent practices. The largest example in dentistry is Heartland Dental, which affiliates with over 3,200 doctors in over 1,960 locations across 39 states and the District of Columbia and is majority owned by KKR.
Sponsor-to-sponsor buyers are the other major pool. Bain expects more than 150 sponsor-to-sponsor deals and more than $120 billion in estimated value for 2025, both record highs. Secondary sales give practice-level platforms an exit path, which keeps their add-on programs funded.
Bain describes physician group investors as moving beyond traditional buy-and-build models and toward integrated, clinician-centric approaches. Independent sponsors and search funds also pursue smaller practices, typically below the size threshold of institutional platforms.
What buyers look for
Buyers price healthcare services businesses on the durability of their clinical workforce and their regulatory standing as much as on EBITDA. The questions that recur in diligence:
- Provider continuity. Whether revenue depends on one or two clinicians, and how long the selling physician or dentist will stay post-close.
- Payer mix and reimbursement exposure. The share of revenue from commercial insurance, government programs, and cash pay, and how sensitive margins are to rate changes.
- Corporate-practice compliance. Whether the existing management agreement keeps clinical decisions with licensed professionals, as state corporate-practice doctrines require.
- Transaction-notice exposure. Whether the deal triggers a state pre-closing filing and how long review could take.
State rules now shape the structure of most practice deals. California's SB 351 prohibits hedge funds and private equity groups involved in business with any medical or dental practice from interfering with the professional judgment of physicians or dentists, among other limits.
What makes a strong company
Healthcare services businesses that attract competitive processes tend to share a few traits:
- Clinicians who are not all near retirement, with an associate or partner bench that can absorb a departing owner's patient base.
- A management services agreement that would survive a state corporate-practice review, with clinical authority clearly retained by licensed owners.
- Clean billing and coding records, since coding and billing decisions are an area that California's SB 351 restricts private equity groups from controlling.
- Above-average financial performance. GF Data defines above-average performers as businesses with TTM EBITDA margin and revenue growth both above 10%, or one above 12% with the other at least 8%.
Valuation and deal structure
GF Data, which tracks PE-backed middle-market transactions, puts the sector near the market average. Its first-half 2026 average was 7.1x trailing 12-month (TTM) adjusted EBITDA across sectors, and healthcare services moderated to 7.7x, though a small sample warrants caution. That data covers the $10 million to $500 million deal cohort, so it says little about single-site practice sales.
The premium for quality has narrowed. GF Data reports that the premium for above-average financial performers, which has averaged about 15% historically, was 7% in Q1 2026, but dipped to 5% for the first half. These are all-sector figures, not healthcare-specific.
Deal timing now depends on regulators as well as buyers. California's AB 1415 requires private equity groups, hedge funds, and MSOs to provide 90 days' notice of agreements or transactions that transfer a material amount of a health care entity's assets or control. In Oregon, SB 951 becomes effective for new transactions starting January 1, 2026, and existing MSO relationships have until January 1, 2029 to comply.
Federal scrutiny persists. In March 2024 the FTC, DOJ, and HHS requested information on transactions that would not be reported to the Justice Department or FTC for antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act. The FTC's later settlement with Welsh Carson over its anesthesia roll-up included no monetary penalties, though Welsh Carson was forced to limit its involvement with USAP.
Subindustries
Consolidation stage differs sharply by vertical. Dentistry is the most mature practice roll-up, with 16% of U.S. dentists affiliated with a DSO as of 2024, while other verticals below sit at earlier or more regulated stages.