Selling your Orthopedic and Post-Surgical Rehab practice in Denver is more than a transaction. It is a major life decision that represents years of hard work. The current market presents a unique window of opportunity for owners, but navigating the process correctly is critical to securing your legacy and financial future. This guide provides a clear overview of the market, key steps, and what you need to know to achieve an optimal outcome.
Market Overview: A Strong and Growing Sector
The market for orthopedic and post-surgical rehab services in Denver is strong. This is not just a local trend. It is supported by powerful national tailwinds. The demand for these specialized services is expanding, driven by an aging population and a significant shift in how and where surgeries are performed. This creates a favorable environment for practice owners who are considering a sale.
Here are a few key statistics that paint the picture:
- National Orthopedic Growth: The U.S. orthopedics market is projected to grow from $57.3 billion in 2023 to $74.1 billion by 2028.
- Colorado’s Robust Market: The physical therapy industry in Colorado is a nearly $1 billion market, showcasing significant local demand.
- The Outpatient Shift: Experts predict that by the mid-2020s, 68% of all orthopedic surgeries will happen in Ambulatory Surgical Centers (ASCs). This directly increases the need for high-quality, accessible post-surgical rehab centers like yours.
These trends mean that well-run practices in prime locations like Denver are highly attractive to a growing pool of buyers.
Key Considerations Beyond the Numbers
When a potential buyer looks at your practice, they see more than just revenue figures. The story of your practice, its reputation in the Denver community, and its operational strengths are just as important. For an Orthopedic and Rehab practice, buyers will look closely at your referral networks. Consistent referrals from top orthopedic surgeons are a sign of a healthy, respected practice. They will also assess the experience of your clinical team and the loyalty of your patient base. Selling is not just about presenting financials. It is about articulating the full value you have built over the years.
Market Activity: Private Equity is Reshaping the Landscape
The current M&A market in healthcare is active, and the orthopedic sector is a particular focus for one influential group: private equity firms. We are seeing this trend play out right here in Colorado.
Increased Buyer Interest
The combination of market growth and a fragmented industry has drawn significant interest from a wide range of buyers, from larger strategic healthcare systems to private equity groups looking to build regional platforms.
The Role of Private Equity
Private equity buyers are sophisticated. They are attracted to practices with strong profitability, efficient operations, and clear opportunities for growth. Their entry into the market has increased competition for high-quality practices, which can lead to higher valuations for sellers who are properly prepared.
What This Means for You
This heightened interest means you may have more options than you think. It also means you will be negotiating with experienced dealmakers. Navigating this environment requires a professional approach to ensure you are positioned to receive the best possible terms, not just the first offer that comes along.
The Sale Process: A Marathon, Not a Sprint
Many owners are surprised to learn that selling a medical practice can easily take 12 months or longer from start to finish. It is a deliberate process that requires significant preparation to run smoothly. The journey typically begins with a comprehensive valuation to understand what your practice is truly worth. From there, we would confidentially market the practice to a curated list of qualified buyers, manage inquiries, and facilitate initial meetings. The most intensive phase is due diligence, where the buyer inspects your financials, operations, and legal standing in detail. Proper preparation for this stage is what separates a smooth closing from a deal that falls apart unexpectedly.
Unlocking Your Practice’s True Value
How is an orthopedic and rehab practice valued? It’s a common question, and the answer is more complex than a simple rule of thumb like a multiple of revenue. Sophisticated buyers and their advisors focus on a key metric called Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents the true cash flow of the business, normalized for any owner-specific or one-time expenses. That Adjusted EBITDA is then multiplied by a specific number, a “multiple,” which is heavily influenced by factors unique to your practice.
| Factor | Impact on Valuation Multiple |
|---|---|
| Provider Reliance | A practice dependent on a single owner has a lower multiple. One with multiple associate providers has a higher multiple. |
| Referral Sources | A diverse and stable base of surgeon referrals increases the multiple. Reliance on one or two sources adds risk and lowers it. |
| Payer Mix | A healthy mix of commercial insurance and private pay is valued more highly than one heavy in lower-reimbursing plans. |
| Growth Potential | Clear opportunities to add services, providers, or locations can command a premium valuation. |
| Scale & Profitability | Practices with higher EBITDA levels are seen as less risky and therefore achieve higher multiples. |
A proper valuation tells a story backed by data. It reframes your practice’s performance to show buyers its full potential, often revealing value that owners did not know they had.
After the Sale: Structuring Your Next Chapter
The final sale price is important, but the structure of the deal will define your future. You should think carefully about what you want your role to be, if any, after the transition. For many physicians, maintaining their legacy and ensuring their staff are protected is a top priority. Deal structures are not one-size-fits-all. Some owners prefer a clean break, while others choose to retain a portion of equity in the new, larger company. This “rollover equity” gives you a second opportunity for a financial return when the larger platform is sold again in the future. Control is not a binary choice. The right deal structure can allow you to cash out on the value you have built while preserving what matters most to you.
Frequently Asked Questions
Why is now a good time to sell an Orthopedic & Post-Surgical Rehab practice in Denver, CO?
The market for orthopedic and post-surgical rehab services in Denver is strong, supported by national growth trends and local demand. The aging population, shift to outpatient surgeries, and the area’s nearly $1 billion physical therapy industry create a favorable environment for sellers, attracting a growing pool of buyers.
What factors do buyers consider beyond just financials when purchasing an orthopedic practice?
Buyers look at the practice’s reputation, referral networks, especially from top orthopedic surgeons, the clinical team’s experience, and patient loyalty. These elements showcase the practice’s operational strengths and sustainability, which are critical beyond pure revenue figures.
How does the presence of private equity firms impact the sale of a practice in Denver?
Private equity firms are actively interested in orthopedic practices due to strong growth and fragmentation in the industry. Their competition can drive higher valuations for sellers who are well-prepared. However, owners will be negotiating with experienced dealmakers, requiring a professional approach to secure the best terms.
What is the typical timeline and process for selling an Orthopedic & Post-Surgical Rehab practice?
Selling a medical practice often takes 12 months or longer. The process begins with a valuation, then confidential marketing to qualified buyers, inquiry management, and initial meetings. The most intensive phase is due diligence, where financial, operational, and legal aspects are reviewed. Proper preparation is essential for a smooth closing.
How is the value of an orthopedic and rehab practice typically determined?
Valuation focuses on Adjusted EBITDA, representing the business’s true cash flow normalized for unique or one-time expenses. This figure is multiplied by a practice-specific multiple influenced by factors like provider reliance, referral diversity, payer mix, growth potential, and profitability. Such valuations often reveal hidden value not immediately obvious from revenue alone.