What Is A Physical Therapy Practice Worth?

Small practices sell on a multiple of seller discretionary earnings, usually in the range of two to four times. Larger practices with real management in place trade on EBITDA and earn higher multiples.

Seller discretionary earnings is your profit plus your owner pay and the personal expenses running through the business. Revenue is not the number buyers pay on.

Insurance based clinics commonly run ten to fifteen percent. Well run cash practices run twenty five to forty percent, because there is no billing drag and no write offs.

Margin matters twice. It pays you now, and it sets your sale price later.

A practice is worth more when its revenue does not depend on the owner treating and a team can deliver the result without you. It also needs documented systems, clean books, and a patient source you control.

• Revenue that does not depend on the owner treating
• A team that can deliver the result without you
• Documented systems for marketing, sales, and delivery
• Clean books, separated from personal spending
• A patient source you control, not one referring doctor

Owner dependence, first and worst. If you are the practice, a buyer is buying a job, and they will pay accordingly.

• One referral source producing most of the revenue
• Messy or commingled financials
• A short or unassignable lease
• Key staff with no agreements

A lease is an asset or a liability at sale, never neutral. A buyer needs to know they can keep the location, so an assignable lease with years of term left protects your price.

A lease ending in eight months, or one the landlord can block from transferring, can knock a deal down or kill it.

Build the case before you list. Two to three years of clean financials, a team that runs delivery, and documented systems will outperform any negotiating tactic.

Most owners start eighteen months too late. The work that raises the price takes about that long.

Three years out, or today if you are already past that. The practice that is ready to sell is also the practice that is enjoyable to own.

That is the point. You get the freedom either way.