The San Diego market for Speech & Occupational Therapy practices is active, presenting a significant opportunity for owners considering an exit. Selling your practice is more than a transaction. It’s a major life decision that requires careful planning to protect your legacy and maximize your financial outcome. This guide provides an overview of the current market, key valuation drivers, and the steps involved in a successful sale, helping you navigate the process with clarity and confidence.
Market Overview
If you own a Speech and Occupational Therapy practice in San Diego, you are in a strong position. The demand for pediatric rehabilitation services is consistently high, driven by a growing awareness of developmental disabilities. This creates a stable and expanding client base for established practices like yours. For example, it’s common for practices in the area to have a client mix that is 70% pediatric.
This high demand also creates significant barriers to entry for new or under-capitalized competitors. It takes years to build the reputation, referral networks, and skilled staff that you already have. Sophisticated buyers and private equity groups understand this. They are actively seeking established, turnkey practices in the San Diego area, making it a seller’s market for those who are properly prepared.
Key Considerations for San Diego Sellers
Beyond the market, your practice has unique characteristics that buyers will scrutinize. Focusing on these areas beforehand is critical.
Navigating Your Payer Mix
A diverse payer mix of early intervention programs, public school contracts, and private insurance is a sign of a healthy practice. However, each comes with its own billing complexities and contractual obligations. Buyers will want to see clean, well-documented revenue cycles. A disorganized approach to this can create friction during due diligence and lower your valuation.
Leveraging Your Team
Your experienced team of licensed SLPs and OTs is one of your most valuable assets. Buyers are looking for continuity and are more likely to pay a premium for a practice with a dedicated staff willing to stay on post-sale. Planning how you communicate the transition to your team is a delicate but important step in preserving the value of your practice.
Finding a Licensed Buyer
In California, the buyer of your practice will typically need to hold a state Speech or Occupational Therapy license. This narrows the field of potential buyers but also ensures that your practice is passed to a qualified operator. The challenge is finding these qualified buyers confidentially without disrupting your operations.
Understanding Market Activity
When you look at publicly listed practices, you may see confusing and inconsistent valuations. For instance, we’ve seen a San Diego practice with $1 million in revenue listed for $500,000, a 0.5x multiple. We’ve seen another with nearly $2 million in revenue and healthy earnings listed at a price that seems far too low. This tells you an important truth. Your practice’s value is not based on a simple revenue multiple. Sophisticated buyers look deeper. They analyze profitability, staff structure, growth potential, and market position. How your practice’s story is told to the market determines whether you get an average price or a premium one.
The Sale Process: A Step-by-Step View
Selling your practice follows a structured path. While every sale is unique, the key phases are consistent. Understanding them can demystify the journey. We believe in running a professional process to protect your confidentiality and create a competitive environment designed to maximize your outcome.
| Stage | What Happens | Why It Matters |
|---|---|---|
| 1. Preparation | We analyze financials, normalize your earnings, and prepare a confidential marketing package. | This phase establishes your practice’s true value and prepares you for buyer scrutiny. |
| 2. Marketing | We discretely approach our network of qualified, licensed buyers and private equity groups. | Protects your staff and clients from knowing the practice is for sale until the time is right. |
| 3. Negotiation | We field offers, create competitive tension, and help you select the best partner and deal structure. | Ensures you get the best possible terms, not just the first offer that comes along. |
| 4. Due Diligence | The chosen buyer conducts a deep dive into your financials, operations, and contracts. | Proper preparation prevents surprises that could derail the sale or lower the price. |
| 5. Closing | Final legal documents are signed, funds are transferred, and the transition plan begins. | The final step to securing your financial future and practice legacy. |
What Is Your Practice Really Worth?
A common mistake is thinking value is tied to revenue. Sophisticated buyers value your practice based on its Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents your true cash flow after “normalizing” for owner-specific expenses like an above-market salary or personal car lease. It shows a buyer the profitability they can expect. This Adjusted EBITDA is then multiplied by a number (a multiple) that reflects your practice’s quality and risk. Factors that increase your multiple include having multiple providers, strong growth, and a stable payer mix. Getting this calculation right is the foundation of a successful sale. A proper valuation tells the story of your practice’s health and future potential.
Planning for Life After the Sale
The day you close the sale is not the end of the story. A successful transition is planned long before the final documents are signed and considers your personal, financial, and professional goals.
Your Transition Role
Most buyers will want you to stay on for a period of time to ensure a smooth handover of client relationships and operational knowledge. This transition can be structured to fit your desired timeline, whether you want to leave quickly or phase out your responsibilities over a year or two.
Deal Structures for the Future
Not all sales are 100% cash at close. Modern deals can include elements like an earnout, where you receive additional payments for hitting performance targets, or rollover equity, where you retain a minority stake in the new, larger company. This can provide a “second bite at the apple,” allowing you to benefit from the future growth you helped create.
Protecting Your Legacy
The right buyer will do more than just write a check. They will be a steward of the reputation you have built. The sale process is your opportunity to vet buyers and choose a partner who shares your values and will take care of the staff and community you’ve served for years.
Frequently Asked Questions
What makes San Diego an attractive market for selling a Speech & Occupational Therapy practice?
San Diego has a strong demand for pediatric rehabilitation services, driven by increased awareness of developmental disabilities. This creates a stable and expanding client base with a common client mix of about 70% pediatric patients. Additionally, the barriers to entry for new competitors are high, making established practices highly sought after by buyers and private equity groups.
How does the payer mix affect the valuation of my practice?
A diverse payer mix including early intervention programs, public school contracts, and private insurance is viewed positively as it indicates a healthy practice. However, each payer type has unique billing and contractual complexities. Buyers will expect clear, well-documented revenue cycles, and poor management of this area can lower your valuation and prolong due diligence.
What should I consider regarding my team when planning to sell my practice?
Your licensed Speech-Language Pathologists (SLPs) and Occupational Therapists (OTs) are crucial assets. Buyers prefer practices with dedicated staff willing to stay on after the sale to maintain continuity. Proper communication and planning around staff transition are important to preserve your practice’s value and ensure a smooth handover.
What are the typical steps involved in selling a Speech & Occupational Therapy practice in San Diego?
The sale process generally includes five stages:
1. Preparation – analyzing financials and preparing marketing materials.
2. Marketing – discreetly reaching out to qualified buyers.
3. Negotiation – managing offers to get the best deal.
4. Due Diligence Рbuyer’s thorough review of your practice.
5. Closing – finalizing legal documents and beginning transition. Each stage is designed to protect confidentiality and maximize sale value.
How can I plan for life after selling my practice?
Planning should start well before closing the sale and consider your personal and professional goals. You might stay on for a transition period to help the buyer and clients adjust. Deal structures can include earnouts or rollover equity, allowing you to benefit from future practice growth. Finally, choosing a buyer who will uphold your practice’s reputation and values is key to protecting your legacy.