The Two Steps to Selling a Physical Therapy Practice

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In speaking to countless business owners, we know that making the decision to sell your business is difficult. In large part, fear of the unknown can create analysis paralysis and, ultimately, lead to inaction. Yes, there is much that goes into selling a physical therapy practice, but with proper planning, and the right team, most of the heavy lifting will be done for you. With that in mind, consider these two main steps now to get the ball rolling: 1) value your business and, 2) identify qualified buyers that will help you realize that value.

Valuing Your Physical Therapy Practice

You have spent years building your physical therapy practice including a lot of hard work, blood, sweat and tears, so of course your practice is extremely valuable to you. And, whether you realize it or not, it is likely even more valuable to the right buyer. That being said, it is important that you be as objective as possible when valuing your physical therapy practice. You must be able to view the business from the new owner’s perspective and understand the value that he/she will place on it as part of the acquisition process. 

To maximize what a potential buyer will pay, focus on your practice’s EBITDA: Earnings before Interest, Taxes, Depreciation, and Amortization. Essentially, a purchaser will want to look at the profitability of your practice, taking into account certain adjustments, and then provide you with a multiple of EBITDA. The EBITDA multiplier truly depends on other key performance metrics and your profit margin, but can, generally, be estimated to be between 3.0 and 5.0 times when EBITDA is below $1 million. Once EBITDA passes $1 million, the multiplier of EBITDA increases. A valuation specialist can help you understand these concepts, analyze your financial statements to determine your practice’s EBITDA, and provide insight into what multipliers make the most sense for your practice.

Identifying Qualified Buyers

Valuing your business so that you better understand what potential deal awaits you is a crucial first step. From there, identifying the right, most qualified buyers can be difficult. You can have the most attractive practice and healthy EBITDA, but if you do not know how to identify, and qualify, a buyer, then your practice’s value will go unrealized. With that in mind, consider looking to your colleagues who are local and looking to expand, selling internally to qualified therapists, or testing the open market through more broad advertising.

The local market can include friendly competitors that have shown an interest in purchasing or merging, friends, mutual acquaintances, and even colleagues. If you have key staff members who have expressed an interest in starting a practice, they may also be valid candidates to purchase your practice.

If you cannot find a buyer within your own network, you may have to expand your search to the open market, which can be a scary thought for many people. You can check out sites that list businesses for sale, such as BizBuySell or BizQuest. However, finding buyers does not end there and in fact, it is only the beginning.

Even before searching these sites, it is recommended that you speak to a business broker. You are likely only going to sell your physical therapy practice one time in your life, and you want to make sure it is done right. A broker will help you find qualified buyers, advise on all the options you have, and limit the possibility of a deal falling through.

Selling a Physical Therapy Practice? Call Our Business Brokers in Washington Today

Selling your physical therapy practice is a huge undertaking, and you want to ensure that you receive top dollar for it. At Private Practice Transitions, our Washington business brokers can help you do just that. We know how to value your business so you receive a fair price, and how to market your practice to the right buyers. If you are considering selling your practice, call us at (253) 509-9224 or contact us online to speak to one of our experienced brokers today.

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