Selling your Occupational Therapy practice is one of the most significant decisions of your career. In Sacramento, the current market presents a unique opportunity for practice owners who are well-prepared. This guide offers a clear overview of the market landscape, what drives your practice’s value, and how to navigate the path toward a successful sale. It is designed to help you understand your options and make informed decisions for your future.
Sacramento’s OT Market: A Snapshot
The Sacramento market for Occupational Therapy is both established and dynamic, creating a favorable environment for sellers. The area’s strong healthcare infrastructure and growing population support a healthy demand for OT services. For you, as a practice owner, this translates into a robust pool of potential buyers, from individual practitioners to larger strategic groups.
Here are a few key characteristics of the Sacramento OT landscape:
- Strong Professional Presence. With over 800 occupational therapists in the metro area, there is a significant concentration of talent and activity. This indicates a mature market that is well understood by sophisticated buyers.
- Attractive Earning Potential. The average total pay for an OT in Sacramento is over $111,000 annually. This solid financial baseline makes practice ownership an attractive proposition for buyers looking for a return on their investment.
- Diverse Service Settings. Practices here operate across various settings, including outpatient clinics, in-home services, schools, and rehabilitation centers. A well-defined niche is a key asset when you decide to sell.
Key Considerations for Your Practice Sale
Beyond the market numbers, a successful sale depends on the unique aspects of your practice. Buyers will look closely at your operational stability and compliance. In California, this means ensuring your practice fully adheres to the Occupational Therapy Practice Act and that your business entity, potentially a Professional Occupational Therapy Corporation, is structured correctly for a sale. These are not just administrative details. They are foundational elements that give buyers confidence.
Equally important is your plan for the future. A significant concern for any potential buyer is continuity. They want to know that patients will continue to receive excellent care and that your valued staff will remain through the transition. Having a clear and thoughtful plan for this handover demonstrates foresight and significantly enhances the attractiveness of your practice. It shows you are not just selling a business, you are transitioning a legacy.
Understanding Current Market Activity
The market for healthcare practices is not theoretical. We are seeing active interest and transactions for well-run OT practices in the Sacramento region. For instance, OT practices with strong revenue streams, some exceeding $1 million annually, are attracting significant attention from a variety of buyers. The key is understanding that different buyers have different goals. Aligning your practice with the right type of buyer is critical to achieving your desired outcome, whether that is maximizing value, preserving your legacy, or ensuring a future for your team.
| Buyer Type | Primary Motivation | Best For Sellers Who… |
|---|---|---|
| Individual OT/Practitioner | Ownership and Autonomy | Want a personal hand-off and to preserve the practice’s core identity. |
| Local/Regional Practice Group | Geographic Expansion | Seek to retire but want their practice to be part of a larger, local entity. |
| Private Equity-Backed Group | Growth and Scale (Platform) | Want the highest financial outcome and may stay on to help grow the business. |
The Path to a Successful Sale
Many owners think selling a practice starts with finding a buyer. In reality, a successful sale begins long before that with careful preparation. The process is a structured journey designed to protect you and maximize your outcome. It generally involves getting a clear understanding of your practice’s market value, confidentially presenting the opportunity to a curated group of qualified buyers, and navigating negotiations.
The most critical phase is often due diligence. This is when the buyer verifies all the financial, operational, and legal information about your practice. This step is where many deals encounter unexpected problems if the seller is unprepared. Proper organization of your financial records, contracts, and compliance documents beforehand makes the process smoother and builds trust with the buyer. A well-managed process ensures you are selling from a position of strength.
What Is Your Practice Really Worth?
Practice owners often ask for a simple multiplier of revenue to value their business. While that can provide a rough idea, sophisticated buyers look much deeper. They focus on profitability and a metric called Adjusted EBITDA.
The Core Metric: Adjusted EBITDA
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. Think of it as the practice’s cash flow. “Adjusted” EBITDA is even more important. It adds back owner-specific expenses like a car lease or an above-market salary to show the true profitability a new owner could expect. Many owners are surprised to learn their practice is worth more than they thought once these adjustments are made.
Beyond the Numbers: The Multiple
This Adjusted EBITDA figure is then multiplied by a number (the multiple) to determine the practice’s value. That multiple is influenced by several factors:
* Provider Reliance: Is the practice dependent on you, or does it have other OTs driving revenue?
* Growth Potential: Are there clear opportunities to expand services or see more patients?
* Referral Sources: Do you have a diverse and stable network of referrals?
A comprehensive valuation is the foundation of a successful sale. It provides a credible, defensible price that lets you negotiate with confidence.
Planning for Life After the Sale
The day the deal closes is a beginning, not an end. Thoughtful planning for your transition is crucial for both your peace of mind and your financial future. This includes how you will support your staff through the change and ensure your patients continue to be well cared for, protecting the legacy you have built. For many owners, this is the most important part of the deal.
Financially, the structure of the sale has major implications. How the deal is structured affects your tax burden and your final take-home proceeds. You may also consider options beyond a 100% cash sale. Some owners choose to retain a part of the business, known as rollover equity, allowing them to benefit from the practice’s future growth. These decisions shape your next chapter. Defining your personal and financial goals early on ensures the final deal is built to help you achieve them.
Your legacy and staff deserve protection during the transition to new ownership.
Frequently Asked Questions
What is the current market landscape for selling an Occupational Therapy practice in Sacramento?
Sacramento’s OT market is mature and dynamic, supported by a strong healthcare infrastructure and growing population. With over 800 OTs in the area and diverse service settings, there is a robust pool of potential buyers including individual practitioners and larger groups. The market is favorable for sellers who are well-prepared.
What key factors influence the value of an Occupational Therapy practice in Sacramento?
Value is influenced by practice profitability measured by Adjusted EBITDA, reliance on the owner as a provider, growth potential, and stability/diversity of referral sources. The practice’s operational stability, legal compliance, and adherence to California’s Occupational Therapy Practice Act also impact buyer confidence and valuation.
What types of buyers are interested in purchasing Occupational Therapy practices in Sacramento?
Buyers include individual OTs who want ownership and autonomy, local or regional practice groups looking for geographic expansion, and private equity-backed groups aiming for growth and scale. Each buyer type suits different seller priorities like preserving legacy, maximizing financial outcome, or ensuring continuity.
What should a practice owner do to prepare for selling their OT practice in Sacramento?
Preparation involves understanding the market value through a comprehensive valuation, organizing financial records and contracts, ensuring compliance with applicable laws, and having a clear plan for patient care and staff retention through the transition. Early planning and due diligence are crucial to a smooth sale and maximizing outcome.
How can the sale structure affect the seller after selling their Occupational Therapy practice?
The sale structure affects the seller’s tax burden and take-home proceeds. Sellers may choose options beyond full cash sales like rollover equity to retain partial ownership and benefit from future growth. Thoughtful transition planning is important for protecting the seller’s legacy, supporting staff, and ensuring patient care continuity post-sale.