Is my PT practice ready to sell? The readiness signals we look for

The short answer

How do you tell whether a physical therapy business and its owner are ready to transition? Readiness has two halves, the business and the owner, and Josh Meyers of Martin Healthcare Advisors explains what MHA looks for in each.

The business:

• Clean financial statements and a clear EBITDA, trending up in revenue and profit
• Efficient operations: schedule management, charge capture, and systems that help therapists succeed
• A track record of growth and a leadership group ready to grow through a transaction

The owner:

• Has thought through their role after the acquisition
• Knows their numbers across financials, operations, and payer mix
• Can explain their culture and why their team is ready to grow

Full transcript

Readiness has two halves, the practice and the owner, and we read them separately.

Let's start with the practice. The clearest signals are clean financial statements, and very specifically a clear EBITDA. A practice trending positively in both revenue and profit is more ready than one trending the other way. Operations play a big role too. Efficient operations and better margins are what produce a strong EBITDA. You can see it in schedule management, in charge capture, and in the systems that help your therapists succeed clinically and operationally.

And finally, growth. A physical therapy business that has shown it can plan and grow is much more attractive in the market. You also want to show acquirers that you intend to grow not just to a transaction, but through a transaction. The best evidence of that is what you have already done. And you want a leadership group that is aligned and will keep growing the company to the next level with an acquirer.

Now, the owner. The clearest sign that an owner is ready is that they have thought through the role they want to play in the business once it is acquired. An owner who is ready knows their numbers and can answer questions in every area of the business: financial, operational, payer mix, and so on. They can also tell you what their culture is and why their team is prepared to grow.

Working with practice owners who are not ready is what we do best. We look at the attributes of the owners who have had the best experience partnering with a larger company, and we build those attributes one at a time. We focus on leadership, on building a clear growth strategy, and on knowing your business well. It all starts with our Outside-In Assessment, which takes your goals and objectives and builds a clear path to achieving them.

Transcript lightly edited for readability.