Is an M&A advisor worth the cost? Value and fees for PT owners

The short answer

What are physical therapy business owners really paying for when they hire an M&A advisor? Not paperwork. It is the difference between the offer in front of you and what the market will actually bear. Josh Meyers of Martin Healthcare Advisors walks through the full fee ladder and what it returns.

In this video:

• Outside-In Assessment: $2,500. Finds what owners miss: understated EBITDA, payer concentration, provider dependence, and gaps an acquirer would use to price you down
• Formal Calculation of Value: $7,500, generally deducted from the success fee later
• Exit, ready now: $7,500 to $15,000 retainer for a competitive process
• Exit, prepare first: $2,500 per month, credited against the success fee
• Grow: $2,500 to $7,500 per month, credited back when you transition
• Success fee: a percentage paid at closing from the proceeds, shown in writing before you commit

In 27 years, every owner MHA has represented collected 100% of what they were promised at the closing table.

Full transcript

What owners are paying for is not paperwork. It's the difference between the offer in front of them and what the market will actually bear. Here's what owners underestimate. The real cost is rarely our fee. It's the value you leave on the table if you go it alone. When we're doing our job, working with us costs you nothing. You're making an investment, and we're giving you a return on it.

This is probably the biggest financial event of your life, and you get one shot at it. So let me be straight with you about what it costs. Think about how you price care in your own clinic. You can tell a patient exactly what the evaluation costs, and the plan of care comes after that. We work the same way.

The evaluation: everyone starts by finding out where they stand. That runs $2,500 to $7,500. An Outside-In Assessment is $2,500. It's where we find what owners miss on their own: EBITDA that's been understated, payer concentration, dependence on one referral source, and the gaps an acquirer would use to price you down. A formal Calculation of Value, the kind a bank or a partner can rely on, is $7,500. Either way, that fee is generally deducted from the success fee later, so you're not paying twice.

Then the plan of care. It says one of two things: exit or grow. If it says exit and you're ready now, a $7,500 to $15,000 retainer takes you straight into a competitive process. If you need a year of preparation first, that's $2,500 a month, and every dollar of it credits against the success fee. The success fee is a percentage of the transaction, paid at closing out of the proceeds. I won't throw out a number here because it depends on the size and shape of your transaction, but you'll see it in writing next to the return we expect it to produce before you commit to anything. And you never write us a check out of your own pocket. We don't get paid unless you get paid.

In return, you get financials normalized to hold up under diligence, a competitive process, and someone defending your terms after the letter of intent, which is when the pressure is highest. If it says grow, expect $2,500 to $7,500 a month depending on what you need, and all of it is credited back when you transition.

How to judge it? Look at what it returns. Every case study on our site shows the full fee and what the owner got back. And in 27 years, every owner we've represented has collected 100% of what they were promised at the closing table. If you're one of the owners who should do this without us, I'll tell you that, too. And if you're not sure where to start, start with a conversation. It's completely confidential, and we'll figure it out together.

Transcript lightly edited for readability.