How to prepare your physical therapy practice for sale
Start about 12 months out. Build earnings, reduce the risk acquirers attach to them, and see your practice the way an acquirer will before any acquirer does. The gap between a prepared and an unprepared practice can be double or triple the multiple, and the last MHA client to complete a year of preparation moved from a 5x to an 8x.
By Josh Meyers, PT, DPT, OCS, MBA, CBI, Director, Consulting Services and M&A Advisor. Updated .
What to do, and when
See it like an acquirer
- Get an Outside-In Assessment: what the market would pay today, and the gaps that cost the most.
- Reconcile monthly P&Ls for the last two to three years and separate personal and one-time expenses.
- Decide what you want after closing: stay, step back or leave, and what matters for your staff.
Fix the fastest value levers
- Charge capture, schedule management and staffing: the three that move value fastest.
- Reduce owner dependency: move referral relationships and daily decisions to your team.
- Review payor mix and referral concentration, and start diversifying where you are exposed.
Get diligence-ready
- Assemble your advisor, healthcare transaction attorney and CPA.
- Check your lease for an assignment clause, and list payer contracts and credentialing.
- Audit documentation and billing so compliance questions do not surface during diligence.
Go to market
- Go to market confidentially, with several qualified acquirers at the same starting line.
- Compare offers on structure, not just the multiple: cash at close, rollover, earnout and your role.
- Keep the clinics running while your advisor carries the diligence requests.
The four factors that move your multiple
Within a size range, four things decide whether a practice lands at the low end or the high end, in this order: earnings and operating metrics, payor mix, geographic footprint and market, and referral concentration. Every item on the checklist above is aimed at one of them. See how they play out in the valuation multiples from 40 MHA transactions.
Six ways a transition goes wrong
- Selling to the first acquirer who calls.
- Going to market unprepared.
- Mispricing the practice.
- Agreeing to terms that ignore your staff and culture.
- Running diligence and your clinics at the same time.
- Choosing the wrong partner.
All six are avoidable with time to prepare.
Questions PT business owners ask
How long does it take to sell a physical therapy practice?
A transaction typically runs six to twelve months from preparation to closing. Preparation before that is what shortens the process and improves the terms.
What raises the value of a PT practice fastest?
Building earnings and reducing the risk attached to them. Charge capture, schedule management and staffing are the three levers that usually move fastest.
Should I tell my staff I am preparing to sell?
Not until you decide to. A well-run process keeps your staff, patients, referral sources and competitors from learning about it until you choose to tell them.
What if my practice is not profitable enough to sell yet?
Then preparation is the right first step, not a transaction. There is a path from not-ready to ready, and it starts with knowing exactly where you stand.
What does the Outside-In Assessment include?
How the market would value your practice today, which of your numbers help or hurt you, the gaps that cost owners most at a transaction, and your realistic options. It costs $2,500, credited toward the success fee, with no obligation.
More guides: Who to hire · Private equity · Valuation multiples
