As an owner of a Missouri Orthopedic & Post-Surgical Rehab practice, your business is a valuable asset in a dynamic market. Selling is a major decision, and the path to a successful exit starts long before you list. The best outcomes are achieved over years, not months. This guide provides a clear overview of the current landscape, from valuation to finding the right buyer, helping you prepare for your transition on your terms.
A Look at the Missouri Orthopedic Market
Your practice is part of a powerful and growing sector in Missouri. Understanding the market’s health is the first step in understanding your opportunity.
A Strong Economic Engine
Orthopedics is a major contributor to the state’s economy. Orthopedic services alone generate nearly $1.8 billion in economic activity. When you include the related post-surgical and physical therapy industry, that figure rises to nearly $2.3 billion. This demonstrates the immense value and demand for the services you provide, a fact not lost on potential buyers.
A Growing Sector
Beyond its current strength, the broader specialist physician industry in Missouri is projected to grow. This forward-looking trend gives buyers confidence that their investment will appreciate. For you, this means your practice is not just valued on its past performance but also on its future potential in a thriving healthcare environment.
Key Considerations for a Missouri Practice Sale
A strong market brings opportunity, but it also brings new complexities. The game has changed from when a physician would sell their practice to a younger associate. Today’s environment requires a different level of preparation. The buyer sitting across the table is less likely to be an individual and more likely to be a corporate entity, like a hospital system or a private equity group. These buyers are sophisticated. They conduct deep financial diligence and negotiate complex deal structures.
How your sale is structured has massive implications for your final take-home proceeds after taxes. It also affects your role after the sale, if any, and the future of your staff. Aligning the sale structure with your personal and financial goals is one of the most important parts of the entire process.
The structure of your practice sale has major implications for your after-tax proceeds.
Who Is Buying Orthopedic Practices in Missouri?
The interest in practices like yours is coming from several directions. Each buyer type has a different motivation, which influences the kind of deal they offer. We see three main groups leading the activity in Missouri today.
- Hospitals and Large Orthopedic Groups. These buyers are often looking to expand their geographic footprint, secure referral networks, and increase their market share. They are strategic buyers focused on integration.
- Private Equity Firms. PE firms have become major players. They see orthopedics as a resilient and profitable specialty. They often acquire a larger “platform” practice and then add smaller “tuck-in” acquisitions, creating value through scale and operational improvements.
- Insurance Companies. A newer trend involves insurers acquiring practices to create integrated care networks. Their goal is to control costs and patient outcomes more directly. This group is changing the competitive landscape for everyone.
Navigating the Practice Sale Process
A successful sale is not an event. It is a structured process. It starts with deep preparation, where we help you organize your financials and craft a compelling story about your practice’s growth potential. We then confidentially introduce your practice to a curated list of qualified buyers to create a competitive environment. This helps ensure you receive the best possible offers. After negotiating the primary terms, the process moves into due diligence. This is an intense review where the buyer verifies everything about your practice. Many deals fail here due to poor preparation. With proper guidance, you can anticipate buyer questions and move smoothly toward closing the transaction.
The due diligence process is where many practice sales encounter unexpected challenges.
How Is an Orthopedic Practice Valued?
Forget the old “rule of thumb” based on a percentage of revenue. Sophisticated buyers value your practice based on its profitability and future cash flow, a metric known as Adjusted EBITDA. This stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. We calculate it by taking your reported net income and adding back owner-specific personal expenses and any above-market owner salary. This reveals the true underlying profitability of the business, which is what a buyer is purchasing. That Adjusted EBITDA figure is then multiplied by a “multiple” to determine the practice’s total value. The multiple isn’t random; it’s influenced by several key factors.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Provider Mix | Dependent on a single owner | Multiple associate providers |
| Growth | Flat or declining revenue | Consistent year-over-year growth |
| Ancillaries | Primarily surgical services | Diverse revenue (PT, imaging, DME) |
| Scale | Under $1M in EBITDA | Over $3M in EBITDA |
Curious about what your practice might be worth in today’s market?
Life After the Sale: Planning for Your Future
Closing the deal is just one milestone. What happens the day after is just as important. A well-designed transaction plan addresses your personal goals for the future. Do you want to continue practicing for a few years under an employment agreement? Are you looking for a clean break to retire? Your answers will shape the negotiation. Furthermore, the future of your dedicated staff and the legacy of the practice you built are critical parts of the conversation. Many modern deals also include components like an earnout or rollover equity, where a portion of your payout is tied to future performance or you retain a stake in the larger new company. Planning for these post-sale realities ensures your transition is successful for you, your team, and your legacy.
Every practice sale has unique considerations that require personalized guidance.
Frequently Asked Questions
What makes the Missouri Orthopedic & Post-Surgical Rehab market attractive for practice sellers?
The Missouri Orthopedic market is a robust and growing sector, generating nearly $2.3 billion in economic activity including post-surgical and physical therapy services. This growth and economic strength make practices in this market valuable assets with strong demand from buyers.
Who are the common buyers for Orthopedic & Post-Surgical Rehab practices in Missouri?
The main buyers include hospitals and large orthopedic groups looking to expand their footprint, private equity firms interested in resilient and profitable specialties, and insurance companies aiming to create integrated care networks. Each buyer type has unique motivations and influences deal structures.
How is an Orthopedic & Post-Surgical Rehab practice valued in Missouri?
Valuation is based on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), reflecting true profitability by adjusting net income for owner-related expenses. This figure is multiplied by a multiple determined by factors like provider mix, growth, ancillaries, and scale, moving away from the old percentage-of-revenue rule.
What should I consider regarding the structure of my practice sale?
The sale structure significantly impacts your after-tax proceeds, your role post-sale, and the future of your staff. It’s crucial to align the sale with your financial and personal goals, considering options like earnouts, rollover equity, and employment agreements to plan a successful transition.
What does the sale process of a Missouri Orthopedic & Post-Surgical Rehab practice typically involve?
The process begins with detailed preparation of financials and narratives about growth potential, followed by confidential introductions to qualified buyers to foster competition. It includes negotiation, an intense due diligence phase, and planning for post-sale realities, all requiring careful guidance to avoid common pitfalls.