Power Hour Optometry: “Private Equity Pulled Back in 2025: How Buyers Actually Value Optometry Practices in 2026”

Host: Eugene Shatsman | Guests: Ann Kavanaugh & Jason Prater
Date: January 23, 2026

Episode Overview

This episode is a must-listen for optometrists interested in selling, buying, or simply understanding how the value of a private practice is determined in the fast-changing current market. Host Eugene Shatsman sits down with Ann Kavanaugh and Jason Prater—two of the most experienced dealmakers in optometric practice acquisitions—for a candid, deep-dive conversation. They explore shifts in buyer demand, what’s driving value after private equity’s 2025 pull-back, and actionable advice for owners who want to maximize the enterprise value of their practices.

Major Themes & Takeaways

• Diminished Private Equity Appetite: After years of rapid growth, 2025 saw private equity buyers pull back, becoming more selective with optometry practice acquisitions.
• Shifting Buyer Mix: There’s a steep decline in OD-to-OD (optometrist-to-optometrist) deals; younger ODs have less interest in ownership.
• Harder Scrutiny on Practice Health: Multiples remain robust for strong practices, but buyers are tougher on quality and due diligence.
• Key Value Drivers: Size, revenue, multiple doctors, and operational robustness drive the highest valuations.
• Strategic Preparation: The panel provides specific, granular strategies for increasing value, with an emphasis on operational metrics and transition readiness.

Key Discussion Points & Insights

1. 2025 Market Recap & Shifting Buyer Appetite

[03:16]

• Fewer Private Equity buyers. Eugene notices a “noticeable shift” in valuation methods and a reduction in buyer competition.
• Consolidators Still Active: “Large ones—myeyedoctor, Acuity Eye Care, Team Vision—have stayed active…but a lot depends on geography.” (Jason Prater, 04:04)

2. Who’s Buying, and Who Isn’t?

[06:29]

• Ann Kavanaugh:
  • “98% of our deals go to private equity. There seems to be a deep desire for the younger associate to just want to have a job and not to run a practice.”
• Private equity outbids ODs due to greater access to capital and leverage, and the desire to purchase at higher multiples (07:10).
• OD-to-OD sales now generally limited to smaller practices (annual collections under $800k–$1M).

3. Valuation: Private Equity Drives the Market

[10:47]

• Key Attributes Private Equity Wants:
  • Multiple ODs
  • Multiple locations
  • Significant revenue ($10 million+ for top tier multiples)
  • Stable local economies and favorable regulatory environments
  • “Eliminating key man risk is probably the number one thing… especially private equity wants.” (Host, 11:41)

4. Multiple Trends & Payout Nuances

[12:26]

• Multiples peaked in 2021: “Peak of the market across the board was about 2021. Since then, several major buyers have stepped out... When competition decreases, then offers will decrease as well.” (Jason Prater)

• Typical multiples in 2025:

  • “We don’t usually get anything less than a six, and can see above 10 at times…” (Jason Prater, 24:47)
  • Multiples can be “manipulated.” PE can lower the EBITDA (earnings) denominator to inflate perceived multiples.

Notable Quote

“The buyers have clued into the fact multiples can be manipulated a little bit.” — Jason Prater [24:47]

5. Operational Adjustments and Their Impact

[26:54] Ann and Jason describe common buyer tactics to reduce reported EBITDA (and thus lower real multiples), such as:

• Imposing hypothetical costs (e.g., “you need a $100k office manager” = $600k off your valuation at a 6x multiple).
• Adjusting for benefits or staff raises not currently in place.
• Host: “It’s not necessarily the EBITDA you did last year…it’s their estimated EBITDA.”

6. Structural and Emotional Realities of Selling

[14:54]

• Sellers generally expected to stay on:
  • Typical private equity deal = 3-year employment agreement.
  • “You can’t…hand over the keys and expect to leave immediately.”
• Earn-out and equity “upside” adds risk: Payments depend on post-sale practice performance—which may change under new management.

Memorable Moment

“If you want to sell, you’re going to have to be able to deal with change. …You won’t be the sole decision maker of your practice.” — Jason Prater [20:04]

7. Why Are More ODs Selling—and Younger Than Before?

[31:23]

• Major motivators:
  • Post-COVID HR fatigue and staffing headaches
  • Challenge of competing with PE-backed, vertically integrated groups like Team Vision/VSP
  • “Younger associates don’t want to own practices anymore. They really want to come in, work, and go home.” (Ann Kavanaugh, 33:39)
  • Generational handoff plans collapse as younger ODs/children opt out of ownership.

Notable Quote

“We have several clients who… have children working with them as ODs, and the children don’t want to take over the practice.” — Jason Prater [34:04]

8. Strategic Opportunities for Private Practice Owners

[35:54]

• Smaller, agile private practices can still outperform in local markets where PE “cannot replicate the magic” of strong patient-provider relationships and nimble specialty care.
• “Focus on specialties and services that PE can’t do well at scale: dry eye, myopia management, sclerals, and aesthetics.” – Host and Jason concurrence

Actionable Strategies for Boosting Practice Value

When to Start Preparing?

[38:46 / 41:44]

• “Is it a month before, a decade before? …You want to be always looking at your metrics.” (Ann Kavanaugh)
• Preferably allow 3–6 months, ideally 1–3 years for runway to make impactful improvements.

Top Value Drivers (& What to Track)

[38:46–50:27]

• EBITDA is king. Consistent revenue growth and strong profitability is the main value driver.

  • Keep a close eye on both cost of goods and labor as % of revenue.
  • Aim for labor and COGS percentages that are “in market.”

• Key leading indicators/metrics to monitor:

  • Schedule Fill Rate
  • Revenue Per Patient
  • Exam-only percentage (reduce; focus on capture/conversion to product sales)
  • Revenue per transaction
  • Frame board turnover and high-runner inventory metrics

Notable Quote

“What buyers are looking for is consistent growth in revenue and good profitability.” — Ann Kavanaugh [38:46]

• Mitigate key-man risk:

  • Hire/retain associate ODs
  • Plan for succession

• Invest in technology & appearance:

  • Modernize both equipment and facilities (e.g., diagnostic equipment like Optos)
  • Buyers value up-to-date, presentable offices.

• Don’t try to artificially boost EBITDA by under-staffing or slashing costs: Buyers do their due diligence and will normalize payroll in their assessment.

Notable Moment

“If you advise a client to go and get rid of 30–40% of the staff to try to maximize EBITDA, they’re going to look at that and say: we’re not going to give you credit for that.”
– Ann Kavanaugh [51:36]

• Regularly “shop” your vendor contracts and optimize for lower COGS.
• Track and improve labor efficiency: Overstaffing directly reduces value.

The Importance of Always Being Ready

[54:07]

• “Markets change. You always want to make sure that your metrics, that you’re growing your revenue, you’re growing your EBITDA, your labor costs are market [rate], your cost of goods are in market—so you can at any point in time decide to sell.” (Ann Kavanaugh)
• “Just be forward looking… take a long-term perspective… come out of the forest, look at the trees from afar… and modify accordingly.” (Jason Prater, 54:32)

Notable Quotes & Timestamps

• On the dominance of private equity
  “98% of our deals go to private equity. There seems to be a deep desire for the younger associate to just want to have a job and not to run a practice.”
  — Ann Kavanaugh [06:29]

• On earn-outs and equity
  “It depends on their risk tolerance. … It takes things that are in your control—when you get money—and puts it out of your control.”
  — Jason Prater [17:23]

• On ‘key man’ risk “Multiple ODs, multiple locations, significant revenue… because if you’re a single OD and something happens to you, there’s huge key man risk.”
  — Ann Kavanaugh [10:47]

• On operational hardship driving sales “Post-COVID HR [challenges]… There’s still the collection issue from managed care, and doctors just wanting to be doctors…”
  — Ann Kavanaugh [31:23]

• On preparation “You always have to be ready. … Markets change.”
  — Ann Kavanaugh [54:07]

Timeline of Key Segments

• [03:16] – Recap of 2025, state of buyers and sellers in the optometric market
• [06:29] – Breakdown of buyer types & why private equity dominates
• [10:47] – What makes a practice attractive to buyers?
• [12:26] – Multiples trend, what numbers are really being paid
• [14:54] – What’s it really like after you sell? Earn-outs, employment, and buyer operational changes
• [24:47] – Reframing multiples: how finance games can disguise lower real valuations
• [31:23] – Why are people selling? Why younger ODs aren’t buying
• [35:54] – The opportunity for private practice post-PE pullback
• [38:46] – Hyper-tactical steps to prepare for sale; what metrics matter
• [54:07] – Final advice on readiness and business-building mindset

Conclusion

This richly detailed episode offers a real-world look at an evolved optometric acquisition market. Buyers are more selective, sellers must be more strategic—and practice owners who focus on growth, operational excellence, and metric discipline will be best positioned for a strong exit. Whether you’re nearing sale or think it's years away, success comes from readiness and continual improvement.

Resources and guest contact info referenced in the show will appear in the episode notes.