How long it takes, and how much of your time it really needs

The short answer

How long does it take to transition a physical therapy business, and how much of your time does it need? From the day we start to closing is usually six to eight months, and it takes less of your time than most owners fear. Paul Martin, Founder and President of Martin Healthcare Advisors, breaks down each step.

The timeline:

• Step 1: Strategy, the confidential information memorandum (CIM), financial model, hand-picked acquirer list, and data room
• Step 2: NDAs signed, the book delivered, and preliminary indications of interest, with every acquirer on the same timeline (synchronized competition)
• Step 3: Management meetings with coaching, then formal letters of intent (LOIs) and choosing your partner
• Step 4: Due diligence, purchase agreements, and the legal process, working closely with your attorney
• Plan on six to eight months, since holidays and attorney negotiations add delays

Full transcript

From the time we take a business into the market, we are usually at a closing 6 to 8 months later. And it takes less of your time than most of you probably fear. From the day we start to the day the wire hits, it's typically 6 months. Here's how that breaks down.

Step one is preparation. It takes about 6 weeks. We sit down with you and build a strategy for getting you to a finish line. We build the confidential information memorandum. That's the book that tells your complete story to acquirers. We tighten up your financial model, and we handpick from the acquirer list. It's not everybody. We work with you to determine the acquirers that will fit you both strategically and culturally. And we also start building your data room.

Step two is marketing. This takes about 4 weeks. We go to those acquirers, get confidentiality agreements signed, and put the book in their hands. After some Zoom calls, they will come back with preliminary indications of interest, and then together we're going to decide who will get to the next step. Everybody gets the same information on the same timeline. That's what creates what we call a synchronized competition.

Step three is acquirer diligence and final offers. This takes about 6 weeks. We plan management meetings so that you have the opportunity to meet the acquirers and they get to meet you. We attend, and we coach you through those meetings. Coming out of those meetings, we request a formal letter of intent from those that we choose. Then you have the opportunity to pick your partner, and we go back and negotiate with the acquirers that we have agreed upon.

Step four is documentation and closing. This is roughly 10 to 12 weeks. This is when the formal due diligence will happen, as well as when the attorneys will create purchase and sale agreements and we start the legal process. While we are not attorneys, we participate in legal calls as needed and work very closely with your attorney. By this time we have already built your due diligence portal, and we will answer and respond to questions from the acquirer.

So if you add that all up, it's right around 6 months. But trust me on this one: while we do everything that we can to keep this process moving, invariably there are some delays. That could be a holiday. It could be an attorney that is really pressing for certain things to be put into the documentation. So realistically, plan on 6 to 8 months. The main point here is that this is a process. Every step is planned, and every acquirer is on the same clock. That's how you get the best price, the right structure, and the fewest surprises.

Transcript lightly edited for readability.