M&A for Clinics Facing Successor Shortage: Avoiding Closure and Ensuring Business Continuity

📖 Approx. 8 minutesPublished: 2026.05.05 ／ Updated 2026.05.08

Clinics Facing Successor Shortage: Is Closure the Only Option?

“My child didn’t choose to become a doctor,” “I don’t have the financial means to have a skilled employed physician take over,” “I’m reaching my limit due to age.” — Clinics and medical corporations struggling with a shortage of successors for these reasons are increasing nationwide. Closing down a practice means losing the trust built with patients over many years, the employment of staff who have worked together, and the contribution to regional healthcare. However, by understanding the option of third-party succession M&A, it’s possible to overcome these challenges, continue the business, and even gain proceeds from the sale to start anew. This article explains the benefits and specific procedures of business succession through M&A for directors and presidents of medical institutions facing successor issues, as well as for professionals involved in medical succession, addressing industry-specific considerations.

Why is the Successor Problem Worsening?

According to surveys by the Ministry of Health, Labour and Welfare, the average age of directors of clinics without beds exceeds 60, and the aging trend is progressing year by year. Approximately 25% of all physicians are aged 60 or over, and among self-employed physicians, there is a significant cohort reaching retirement age. On the other hand, not all children of physicians become doctors, and even if they do, the number of cases where they prioritize careers at university or core hospitals and take over their parents’ clinics is decreasing. This situation highlights the difficulty of intra-family succession and creates a structural issue leading to a large number of clinics without successors.

Age Composition of Self-Employed Physicians (Approximate)

Options for Clinics Facing Successor Shortage

Clinics facing a successor shortage have three main options to consider: closure, internal succession, and third-party succession (M&A). Let’s examine the characteristics of each, particularly the advantages of third-party succession.

1. Closure: An Option with Significant Losses

While closure may seem like the simplest solution, it comes with numerous drawbacks. Patients who have been visiting for years must be referred to other medical institutions, potentially creating gaps in regional healthcare. Furthermore, the employment of staff who have worked together is lost, along with the clinic’s reputation and brand value built over time. Medical equipment and interior furnishings often end up being disposed of if they have low resale value, leaving only the processing of severance pay and outstanding debts. There is no possibility of receiving sale proceeds, offering almost no economic benefit.

2. Internal Succession: Challenges in Candidate Selection and Funding

Internal succession, where the business is transferred to in-house staff such as employed physicians or vice directors, can sometimes lead to a relatively smooth handover. For patients and staff, having a familiar physician become the director can provide a sense of security. However, this method presents several hurdles. Firstly, a major challenge is whether the internal staff candidate has sufficient financial resources to purchase the medical corporation. Additionally, their suitability as a medical manager and, most importantly, their willingness to take over must be carefully assessed.

3. Third-Party Succession (M&A): Balancing Business Continuity and Economic Benefits

Third-party succession (M&A), where the practice is transferred to an external medical corporation, business company, or an independent-minded physician, is becoming the most realistic and effective solution for clinics without successors. The biggest advantage of this method is the high possibility of business continuity. The acquiring party typically aims to maintain and develop the business, seeking to acquire existing patients, staff, and the clinic’s know-how and medical fees. Furthermore, the selling party can have the business value of the clinic assessed and receive economic returns in the form of sale proceeds. This can serve as funds for the director’s retirement or for investment in new ventures.

Succession Pattern	Overview	Merits	Demerits/Challenges
Intra-family Succession	Succession by a child or relative who is a physician	Potential for smooth handover Maintenance of philosophy and culture	Candidates limited to physicians Issues with candidate suitability/motivation Burden of inheritance tax, etc.
Internal Succession	Succession by an employed physician or vice director	Sense of security for staff and patients Business continuity	Lack of funding for candidates Suitability as a manager Confirmation of candidate’s motivation
Third-Party Succession (M&A)	Succession by an external medical corporation or business company	Acquisition of sale proceeds Fundamental resolution of successor issues Protection of staff and patients Broad pool of candidates	Complexity of negotiations and procedures Valuation of business Difficulty in maintaining philosophy and culture

Deep Dive into Merits for the Seller in Medical M&A

Third-party succession (M&A) is not just a solution for successor issues; it also brings numerous benefits to the seller. In the M&A of medical institutions, the following points are particularly emphasized:

1. Economic Returns through Sale Proceeds

The business value of a clinic or medical corporation is assessed based on various factors such as location, patient numbers, treatment records, facilities, staff, and future profitability. Through M&A, it is possible to obtain sale proceeds (purchase price) that embody this value. These proceeds can form an important foundation for future planning, such as providing funds for the director’s retirement or reinvestment in new medical ventures. Depending on the scale and profitability of the business, sale proceeds are generally negotiated in a range from a few percent of annual revenue (sales) to, in some cases, more. However, this is merely a guideline and can vary significantly for each individual case.

2. Realization of Staff Employment and Continuous Patient Care

In M&A negotiations, it is common for the acquiring party to make the maintenance of existing staff employment and the provision of continuous medical services to patients a condition. This allows the selling party to protect the livelihoods of staff who have worked together for many years and to ensure an environment where patients they have treated can continue to receive medical care with peace of mind. This is a significant social benefit that cannot be achieved through closure.

3. Addressing Specific Issues of Medical Corporations

For medical corporations, their form (e.g., corporate medical corporation, foundation medical corporation), the composition of their members (shareholders), and the presence of funds can affect the M&A structure. For example, the procedures for member retirement/change, valuation and transfer of equity interests, and refund of funds in corporate medical corporations require specialized knowledge. Furthermore, factors such as the impact of medical fee revisions, maintenance of facility standards, and transfer of various licenses also influence the valuation and complexity of M&A. The utilization of M&A advisors who can handle these specialized issues is essential.

Basic Process of Medical M&A

Medical institution M&A requires specialized expertise different from general business succession. Here, we explain the basic steps of third-party succession (M&A), considering the characteristics of the medical industry.

1. STEP 1: M&A Consideration and Preparation 📋
   Grasp the current situation of the successor issue and consider M&A as an alternative to closure. Organize desired transfer conditions (price, timing, staff employment, etc.).
2. STEP 2: Selection of M&A Advisor 🔍
   Select a specialist familiar with medical M&A (brokerage firm, FA, etc.). Sign a Non-Disclosure Agreement (NDA).
3. STEP 3: Creation and Disclosure of Company Overview (TC) 📝
   Create a company overview summarizing the clinic’s profile, financial status, business details, etc. Disclose anonymized information to potential acquirers.
4. STEP 4: Meeting with Potential Acquirers and Letter of Intent (LOI) 🤝
   After anonymized information disclosure, meet with interested potential acquirers. If terms align, sign a Letter of Intent (LOI) or Memorandum of Understanding (MOU).
5. STEP 5: Due Diligence (DD) 🧐
   The acquiring party conducts a detailed investigation of the seller’s finances, legal matters, business operations, etc. For medical institutions, this also includes investigating medical fee receivables, licenses, facility standards, and patient records.
6. STEP 6: M&A Agreement and Closing ✅
   Based on the due diligence results, sign the final purchase agreement (e.g., stock transfer agreement, business transfer agreement). Execute the transfer (closing).
7. STEP 7: Integration and Post-Merger Integration (PMI) 💼
   Transfer of business to the acquiring party, system integration, organizational restructuring, etc.

Key Points for Successful Medical M&A

To ensure the success of medical institution M&A, several key points are crucial. Firstly, for both sellers and buyers, M&A is a major life decision. Therefore, decisions must be based not only on emotional aspects but also on objective perspectives and specialized knowledge. In particular, selecting an M&A advisor who understands and can appropriately handle the unique factors of medical corporations, such as specific regulations, medical fee systems, and regional healthcare plans, is extremely important.

Furthermore, during due diligence (DD), it is necessary to thoroughly examine not only financial aspects but also the compliance system as a medical institution, the maintenance status of medical equipment, employee working conditions, and patient information management systems. When calculating sale proceeds, consideration is increasingly given not only to past earnings but also to future profitability and contributions to the regional healthcare provision system. It is also wise to conduct advance simulations with experts regarding taxes on capital gains (capital gains tax) and implement appropriate tax measures.

To all medical institutions facing the challenge of successor shortage, please consider business succession through M&A before thinking about closure. Consult with experts to find the best path for your institution’s future. At M&A Medical, our specialists familiar with the medical industry will propose the optimal M&A strategy tailored to your situation. Please feel free to contact us for an initial consultation.

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Consult M&A Medical for Medical Succession

M&A Medical is a specialized M&A and business succession support service for medical institutions. As an M&A support institution certified by the Small and Medium Enterprise Agency, we support the successful transfer of clinics and medical corporations struggling with successor shortages, as well as strategic acquisitions, on a success fee basis.

• Initial consultation and preliminary appraisal are free
• No upfront fees or monthly charges (success fee only)
• Strict confidentiality (proceeds after signing NDA)
• Support for all 47 prefectures and all medical specialties

Please consult us early in your consideration phase, whether you want to know the market value, have no successor, or are considering joining a group.

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