Guide to Selling a Clinic-Based ABA Therapy Practice in South Dakota

Selling your clinic-based ABA therapy practice is a significant decision. In South Dakota, the market for selling is currently active, presenting a real opportunity for owners. However, turning that opportunity into a successful exit requires more than just finding a buyer. It demands strategic preparation to navigate the complexities and maximize your practice’s value. This guide provides key insights into the process.

Market Overview

If you are considering a sale, the timing is favorable. The M&A market for pediatric therapy practices, including ABA, is robust. Buyers, from strategic regional groups to private equity platforms, are actively seeking to acquire quality practices to expand their footprint.

An Active Buyer Landscape

Buyers are knowledgeable. They are looking for practices that demonstrate consistent growth, strong clinical teams, and efficient operations. This demand creates a competitive environment where well-prepared practices can achieve premium valuations. The key is understanding what these buyers are looking for before you begin the process.

South Dakota’s Healthcare Growth

This national trend is amplified by local economic factors. Healthcare is already a cornerstone of South Dakota’s economy, employing 16% of all private-sector workers. More importantly, its projected to be one of the state’s fastest-growing industries, with an expected 12.4% increase in jobs by 2030. This growth signals a rising demand for all healthcare services, including the vital behavioral health support your practice provides.

Key Considerations for South Dakota Owners

Beyond general market trends, selling an ABA practice in South Dakota requires a sharp focus on state-specific rules. A potential buyer will scrutinize your compliance with these regulations during due diligence. Two areas are particularly important.

First, licensing is not optional. Behavior analysts must be licensed through the South Dakota Board of Social Work Examiners. Your practice’s value is directly tied to having a properly licensed clinical team.

Second, you must understand the state’s insurance mandate for autism services. While South Dakota law requires coverage, it comes with specific limits that affect your revenue streams. A buyer will analyze your patient mix and revenue based on these caps.

South Dakota ABA Insurance Coverage Mandate (Annual Caps)

Demonstrating a clear understanding and management of these revenue-related regulations is critical. It shows a buyer that your practice is stable and well-run.

Market Activity and Buyer Expectations

The high level of market activity means that buyers can be selective. In our experience, we see them consistently focus on a few key areas that signal a healthy and scalable practice. While every buyer is different, they are all looking for a compelling story backed by solid data. The conversation often revolves around a metric called EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), with valuation expressed as a multiple of that number.

Here are four things buyers consistently look for in an ABA practice:

1. Strong Financial Performance. This means clean financial statements showing consistent revenue growth and healthy profit margins. It’s the foundation of any valuation.
2. A Quality Clinical Engine. Buyers want to see a stable team of licensed BCBAs and RBTs, low staff turnover, and documented clinical outcomes. The quality of your care is a major asset.
3. Robust Infrastructure. This includes everything from your billing systems and EMR to your compliance protocols and operational procedures. Efficient back-office operations reduce a buyer’s perceived risk.
4. A Clear Growth Path. Can the practice grow? Buyers pay a premium for opportunities, whether that means expanding services, opening a new location, or improving payor contracts.

The Sale Process at a Glance

Selling your practice is a structured process, not a single event. While it can seem complex, it typically follows four main phases. Preparing in advance for each stage is the best way to ensure a smooth and successful transaction.

Phase 1: Preparation

This is the most important stage. It involves organizing your financial, operational, and legal documents. It is also when you should get a professional business valuation to understand what your practice is worth and set a realistic price range. This foundational work prevents delays and problems later on.

Phase 2: Confidential Marketing

Your practice is marketed confidentially to a curated list of qualified buyers. An advisor manages this process to protect your staff, patient, and community relationships while creating competitive tension among interested parties to drive up the value.

Phase 3: Due Diligence

Once you accept an offer (typically in a non-binding Letter of Intent), the buyer begins due diligence. This is a thorough investigation, usually lasting 4-6 weeks, where the buyer and their team verify all the information you have provided. This is often the most intense part of the process.

Phase 4: Closing

After successful due diligence, attorneys draft a final purchase agreement. Once signed, the funds are transferred, and the ownership of the practice officially changes hands.

How Your Practice is Valued

One of the first questions every owner asks is, “What is my practice worth?” The answer is based on more than a simple formula. It is about your practice’s cash flow, its risks, and its potential for future growth. Buyers look at Adjusted EBITDA, which is a way of showing the true earning power of the business. We find your reported profit, then add back owner-specific expenses like a car lease or an above-market salary to get a true picture.

That Adjusted EBITDA figure is then multiplied by a number (the multiple) to determine the practice’s enterprise value. Here are a few factors that influence that multiple:

1. Scale and Profitability. Larger practices with higher EBITDA generally receive higher multiples because they are seen as less risky investments.
2. Provider Dependence. A practice that relies less on the owner and has a strong team of associate providers is more valuable than a solo-owner shop.
3. Payor Mix. A healthy mix of insurance contracts demonstrates revenue stability.
4. Strength of Your Team. Low staff turnover and a tenured clinical and administrative team are significant assets that buyers will pay for.

An accurate valuation is the foundation of a successful exit strategy. It informs your negotiations and helps you plan for your financial future.

Post-Sale Considerations

The transaction does not end the moment the papers are signed. A successful exit involves careful planning for what comes next, both for you and the practice. It is important to decide on your goals early in the process.

Your Future Role

What do you want to do after the sale? Many buyers prefer the seller to stay involved for a transition period, either clinically or in a business development role. If you want a complete exit, that is also possible. Being clear about your personal goals is key to negotiating a deal that works for you.

The Non-Compete Agreement

If you plan to make a clean break from the practice, expect the buyer to require a non-compete agreement. This is a standard contract that prevents you from opening a competing practice or working for a competitor within a certain geographic area for a specific period. These terms are negotiable.

Deal Structure and Your Taxes

The structure of the sale has a massive impact on your after-tax proceeds. An asset sale and a stock sale are taxed very differently. Planning for this with an experienced advisor and a CPA before the sale can potentially save you a significant amount in taxes and ensure you keep more of your hard-earned money.