I sold my group practice on December 31, 2021, about six months after a buyer first reached out. I’d built it from a solo Medicare and Medicaid practice into a 15-clinician group, and I did all of the billing myself the entire time. Since then I’ve consulted with practice owners at every stage of selling, from “I think I might want out in a few years” to “the letter of intent is on my desk and I don’t understand it.”
This guide covers what I get asked most: what a practice is worth, who actually buys small therapy practices, how long it takes, and what to do now if you think you’ll sell someday. Where my own sale was unusual, I say so, because a lot of the advice online is written by brokers or by people who have never signed a purchase agreement.
Who this is for
This applies to any owner-run therapy practice, whether you have two clinicians or forty: mental health and counseling, psychology and neuropsychology, physical therapy, occupational therapy, speech therapy, and ABA. The process of selling is close to identical across those fields and across sizes. What changes with size is the buyer pool and the price, and I note where that matters.
In almost every practice I work with, the owner is the largest single risk in the valuation, and much of what follows is about changing that before a buyer sees your books.
What is a therapy practice worth?
A therapy practice is usually priced as a multiple of its earnings, and then adjusted up or down for how risky those earnings look to the buyer. The earnings number is EBITDA (earnings before interest, taxes, depreciation, and amortization) or, for owner-operated practices, seller’s discretionary earnings, which adds back the owner’s salary and personal expenses run through the business. The multiple varies widely with size, payer mix, and buyer type, and a broker who quotes you a number before seeing your books is guessing.
EBITDA gets you the starting point. These are the factors that moved the number in my sale and that I see move it for clients:
- Payer contracts. I had established Medicare and Medicaid contracts and a patient population most practices don’t serve, and my buyer specifically wanted them. That’s years of credentialing work they didn’t have to do, and it had a price. The same is true of commercial contracts with good rates. One caution: not every buyer wants government payers, so your payer mix shapes which buyers will be interested before it shapes the price.
- Location and market. Where the practice sits, what the competition looks like, and whether a buyer already has a footprint nearby. A practice that fills a gap in a buyer’s map is worth more to that buyer than to anyone else.
- Lead flow you don’t personally generate. My practice ranked well in search, and the buyer counted that as an asset. Referrals that depend on your name and relationships transfer poorly. A website that ranks, a referral network tied to the practice, and a waitlist all transfer well.
- Owner dependence. How much of the revenue, the referrals, the billing, and the clinical supervision runs through you. Every function that stops when you leave is a discount.
- Team stability. Clinician tenure, whether they’re W-2 or 1099, whether they have non-competes or non-solicits, and whether they’ll stay through a transition.
- Clean records. Compliance documentation, credentialing files, an audit history without findings, and financials that reconcile. A buyer will pay more for a practice where nothing needs cleaning up, because cleanup is time and risk on their side.
If you have two years before you want to sell, working on the last three items is where the money is.
Do you need a professional valuation, and what does it cost?
Most practice owners don’t need a formal valuation until they have a serious buyer, and some never do. What you need early is an honest estimate, so you know whether selling is worth it and what to fix first.
There are roughly three ways to get a number, and they cost very different amounts. A broker will usually give you an opinion of value for free, because they’re hoping to list your practice, and I’ve found those numbers tend to run high. A CPA or valuation analyst can produce a calculation of value for a few thousand dollars, which is enough for planning, a partner buyout, or a first conversation with a buyer. A full certified valuation runs well into five figures and comes into play for legal disputes, some SBA-financed deals, and complicated ownership structures. For most practices, the middle option is the right one.
In my sale, the buyer ran their own valuation as part of due diligence, which is common when a larger organization approaches you. Even then, having your own number before you start negotiating is the difference between reacting to their offer and knowing what you’ll accept.
Who buys therapy practices?
Four kinds of buyers, and each one values your practice differently.
- An individual clinician, often someone already on your team or a local clinician who wants to own instead of rent. They pay the least, often with seller financing or an SBA loan, and they care most about whether the caseload and referrals will stay. This is the most common buyer for practices under about five clinicians.
- Another local or regional group looking to add a location, a specialty, or a payer contract. They pay for strategic fit and can usually close faster than an individual because they have the infrastructure already.
- A larger organization, sometimes backed by investors, that is building a multi-site platform. They pay the most, do the most due diligence, and usually want the owner to stay on for a transition period of six months to two years. They are the least interested in practices where everything depends on the founder.
- A hospital system or FQHC in some markets, particularly for practices with Medicaid or Medicare volume they need.
My buyer was a larger organization, and they came to me; I wasn’t listed. That happens more than people expect once a practice reaches a certain size and has something a buyer wants, which in my case was payer contracts and a patient population they were trying to reach.
For physical and occupational therapy practices, the buyer landscape is similar but the platform buyers are more active and more consolidated, so an unsolicited approach is even more likely once you pass a few locations or a certain revenue threshold.
How long does it take to sell a therapy practice?
Plan on 12 to 18 months from the day you decide to sell to the day the money lands. That’s what I tell clients, and it holds whether you have three clinicians or thirty.
My own sale took about six months: first contact in July, closed December 31. That was fast, and it was fast for reasons that don’t apply to most people. The buyer approached me, so there was no search for a buyer. They already knew what they wanted (my payer contracts and patient population), so there was little negotiation about fit. And my books, credentialing files, and compliance records were in order because I’d been running billing myself for years. Take away any one of those and it would have taken a year.
Where the time goes, in rough order:
- Deciding and preparing (three to twelve months). Getting the financials clean, reducing owner dependence, and figuring out your number. This is the part most owners skip, and it’s the part that determines the price.
- Finding a buyer (one to six months). Faster if one finds you or you use a broker with an active buyer list; slower if you’re quietly asking around.
- Letter of intent to purchase agreement (anywhere from a couple of months to most of a year). This is where deals slow down. Due diligence, the buyer’s valuation, and the back-and-forth on terms can run for months, especially if there’s an earn-out, a real estate question, or disagreement about how long you’ll stay. Budget more time here than feels reasonable.
- Closing and transition (one to two months to close, then whatever transition period you agreed to).
If you’re on Medicare or Medicaid, payer transfer and re-credentialing can add time on the buyer’s side, and a buyer who already holds those contracts is worth more to you partly because they skip it.
How to prepare your practice for sale
If I sold again, there are two things I’d do differently, and they’re both about preparation rather than the deal itself.
I would have scaled a little further first. Fifteen clinicians is a good size, but the multiple and the buyer pool both improve as you grow, and I was closer to the next tier than I realized. If you’re thinking of selling in two or three years, the question to ask now is whether one more year of growth changes who can buy you and what they’ll pay.
I would have put more buffer between me and my team. I had two very part-time administrative people and I was the person everyone came to. A buyer looks at that and sees a practice that runs on the founder. A clinical director, an office manager, or a billing lead who owns their function makes the practice easier to value, easier to transition, and easier to leave.
Beyond those two, here is what I have every client work on:
- Get the financials to where a stranger could read them. Separate personal expenses, reconcile monthly, and be able to produce two to three years of clean profit and loss statements on request.
- Stop making big purchases. A new EHR, a build-out, a second location, or a large equipment buy in the year before a sale rarely adds to the price and often complicates the deal. If it isn’t going to pay for itself before closing, wait and let the buyer decide.
- Document how the practice runs: intake, scheduling, billing, credentialing, supervision, onboarding. If it lives in your head, it doesn’t transfer.
- Review clinician agreements. Know who is W-2 and who is 1099, what the non-solicit terms are, and whether anyone is likely to leave when you do.
- Make sure your compliance house is in order: credentialing files current, documentation audits done, no open payer issues.
- Build lead sources that belong to the practice, not to you. A website that ranks, a Google Business Profile with reviews, and referral relationships tied to the practice name.
- Decide on your own transition terms before anyone asks. How long are you willing to stay? In what role? That answer shapes which buyers make sense.
- Talk to someone who has done this before you talk to a buyer. A broker works for the deal and your attorney works on the documents; a consultant who has sold a practice can tell you what to fix first, what an offer actually means, and what to push back on.
Selling a therapy practice, step by step
- Decide what you actually want. A full exit, a partial sale, a merger, or staying on as an employee. The answer changes everything downstream.
- Get your number. An estimate first, a formal calculation of value when a buyer is real.
- Spend six to twelve months fixing what lowers the number. Owner dependence, messy books, undocumented systems, shaky agreements.
- Assemble the team. A healthcare transaction attorney (not your general business lawyer), a CPA who has seen practice sales, a consultant who has sold a practice and can sit on your side of the table, and a broker if you need help finding buyers.
- Find the buyer, or respond to the one who found you. Sign an NDA before sharing financials.
- Negotiate the letter of intent. Price, structure (asset sale versus stock sale), earn-outs, transition terms, non-compete. The LOI isn’t binding on price, but it sets the frame for everything after.
- Get through due diligence and the purchase agreement. Financial, legal, clinical, and compliance review, then months of negotiating the actual contract. Expect the buyer to find things; clean practices close faster.
- Sign and close. Then tell your team and your patients according to whatever communication plan you and the buyer agreed on.
- Serve out the transition, and then actually leave. The leaving is its own project, and I’ll get to that below.
The part nobody warns you about
I’m happy with my decision to sell. I’d make it again. And the hardest part of the whole thing was not the negotiation, the lawyers, or the due diligence. It was realizing afterward how much of my identity had been tied to being the owner of that practice.
I didn’t see it while I was in it. The practice was where I was needed, where I had authority, where my name meant something in the community. When the sale closed, all of that transferred to someone else on the same day, and I had no plan for what I was going to be instead.
If you’re a year or more out from selling, start on this now, in whatever form works for you: therapy, a coach, a peer group of other owners who’ve exited, or simply time built into your week that isn’t about the practice. The owners I work with who handle the transition well are the ones who started becoming something other than “the owner” before the closing date.
Frequently asked questions
How do I value my behavioral health practice before selling?
Start with two to three years of clean financials and calculate seller’s discretionary earnings. Then look at what would make a buyer nervous: how much runs through you, how stable the team is, and how durable the referrals are. A CPA or valuation analyst can turn that into a calculation of value for a modest fee; a broker will give you an opinion for free.
How can I prepare my behavioral health practice for a smooth sale process?
Reduce owner dependence, document how the practice runs, clean up the books, review every clinician agreement, and decide your transition terms before a buyer asks. Most of that takes six to twelve months, which is why the 12-to-18-month timeline exists.
What is the average time to sell a small physical therapy practice?
The same 12 to 18 months as other therapy practices when you’re the one looking for a buyer. Faster if a platform buyer approaches you, which happens often in PT once a practice has more than one location.
Who are the typical buyers for small physical therapy practices?
Individual therapists (often with SBA financing), local and regional groups adding a location, and multi-site platforms, many of them investor-backed. Platforms pay the most and require the longest transition.
What does a professional business valuation cost for a small therapy practice?
A broker’s opinion of value is usually free. A calculation of value from a CPA or valuation analyst runs low four figures. A full certified valuation runs five figures and is rarely needed for a single-location practice.
Can I sell a practice that’s mostly Medicare or Medicaid?
Yes. Not every buyer wants government payers, so your list of likely buyers will be shorter, but to the right buyer those contracts are an asset. Established contracts, a compliant billing history, and a patient population the buyer wants to reach all add value. That was true in my sale; my buyer came looking for exactly that.
What about a private pay practice? Is it worth less?
It can be, and it helps to understand why. Many buyers prefer insurance-based practices because the demand is steadier: clients keep coming in through the payer, they tend to stay, and the practice gets paid without much marketing. A private pay practice has to keep generating its own demand, and a buyer prices that ongoing marketing effort as risk. That said, I know private pay practices that have sold, and sold well. What made the difference was a full caseload, a waitlist, a local reputation that belonged to the practice rather than the owner, and clinicians who stayed. Where private pay gets discounted hardest is when most of the demand is really demand for you personally.
I own the building. Will the buyer buy that too?
Usually not. Most buyers want the practice, not the real estate, and the two are handled as separate transactions if the buyer wants the building at all. The more common outcome is that you keep the building and lease it to the buyer, which can turn into a steady income stream after the sale. Decide early whether you’d rather sell it, lease it, or walk away from it, because it affects who the right buyer is.
Should I use a broker?
If you don’t have a buyer and don’t have time to find one, a broker earns their fee. If a buyer has already approached you, you need a transaction attorney and a CPA more than a broker.
How long will I have to stay after the sale?
Anywhere from a few months to two years, depending on the buyer. Individual buyers want a short handoff; larger organizations usually want the owner through at least one full cycle of the business. Decide what you’re willing to do before you negotiate.
If you’re thinking about selling
I work with a small number of practice owners each year who are one to three years out from a sale, or who have a buyer in front of them and want someone who has been through it on their side of the table. That work covers valuation prep, reducing owner dependence, reading and negotiating an LOI, and planning the transition, including the part where you figure out what comes next for you.
If that’s where you are, book a discovery call here. Tell me the size of your practice, your payer mix, and roughly when you’d like to be out, and I’ll tell you whether I’m the right person to help.
