Selling your Orthopedic & Post-Surgical Rehab practice is one of the most significant financial decisions of your career. In a market as dynamic as New York, a successful exit requires more than just a willing buyer. It demands strategic preparation, a deep understanding of market trends, and a clear view of your personal and financial goals. This guide provides insights into navigating this complex journey, turning a potentially stressful process into a rewarding one.
Market Overview
The New York market for orthopedic and rehabilitation services is robust, but also incredibly competitive. Understanding this environment is the first step toward a successful sale.
A Competitive Landscape
New York is home to a high concentration of world-class medical facilities and a demanding patient population. For practice owners, this means your reputation and operational efficiency are constantly being measured against high standards. When you decide to sell, buyers are not just acquiring your assets. They are buying your market position, referral network, and ability to thrive in a challenging environment.
Strong Buyer Appetite
Demand for well-run Orthopedic & Post-Surgical Rehab practices in New York is strong. Buyers range from large hospital networks looking to expand their continuum of care to private equity groups aiming to build regional platforms. These sophisticated buyers are looking for practices with a history of stable revenue, a diverse payer mix, and potential for growth. This creates significant opportunity, but it also means you will face intense scrutiny.
3 Key Considerations Before You Sell
Proper planning can make a world of difference in your final outcome. Many owners think about selling for years, but we find that taking action on a few key items is what truly prepares a practice for a premium valuation. The best time to start thinking about this is two to three years before your target sale date.
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Get Your House in Order. Before you even think about a valuation, you need to have your documentation organized. This means clean financial statements, up-to-date licenses, credentialing files, and employee agreements. Buyers will eventually perform due diligence, and being prepared from day one shows professionalism and builds trust. It also prevents surprises that could delay or derail a deal.
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Define the Deal Structure. You are not just selling a practice. You are selling a collection of assets or an entire legal entity. Most small to mid-sized practices are sold as assets, which is often more favorable for the buyer from a tax perspective. Understanding the difference between an asset sale and an entity sale is critical, as it has major implications for your liabilities and after-tax proceeds.
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Craft Your Narrative. Buyers don’t just buy numbers on a spreadsheet. They buy a story and a future. Your practice’s story includes its history, its reputation in the community, its key referral sources, and its unique growth opportunities. We help owners frame this narrative in a concise executive summary that highlights the practice’s true value beyond its tangible assets.
New York Market Activity: Who is Buying?
The type of buyer you attract will shape the entire deal, from valuation to your role after the sale. The two most common buyer profiles in the New York Orthopedic & Rehab market today are private equity firms and established strategic acquirers, like hospital systems or large provider groups. Each has different motivations.
| Feature | Private Equity Buyer | Strategic Buyer (e.g., Hospital) |
|---|---|---|
| Primary Goal | Growth and financial return. They build a platform to sell again in 5-7 years. | Integration and service line expansion. They want to capture a larger patient share. |
| Your Post-Sale Role | Often remain as a clinical leader with financial incentives (equity rollover). | May become an employee of the larger system, with less operational control. |
| Ideal Target | Profitable, scalable practices with strong management and growth potential. | Practices with strong referral networks in a key geographic area. |
Understanding these differences is key. A partnership with a PE firm might offer a “second bite of the apple” financially, while a sale to a hospital could provide stability and reduce your administrative burden. The right choice depends entirely on your personal goals.
The 4 Stages of the Sale Process
Selling a practice is a structured process, not a single event. While every deal is unique, the journey generally follows a clear path that is best managed with professional guidance to maintain confidentiality and momentum.
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Foundation: Valuation and Preparation. The process begins with a comprehensive, realistic valuation. This is more than a simple calculation. It involves analyzing your financials, operations, and market position to determine a defensible Fair Market Value. At the same time, we help you assemble the necessary documents into a secure data room.
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Marketing: Confidential Outreach. Your practice is not listed on a public marketplace. A professional process involves creating a confidential information memorandum (CIM) and discreetly approaching a curated list of qualified buyers who have been vetted for their strategic fit and financial capacity.
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Negotiation: Structuring the Offer. Once interested buyers emerge, you will receive Letters of Intent (LOI). This is a critical stage where an advisor helps you compare offers, which often include different combinations of cash, earnouts, and equity. The highest price is not always the best offer.
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Due Diligence & Closing: The Final Stretch. After an LOI is signed, the buyer conducts deep due diligence to verify all information. This is where many deals encounter problems if preparation was poor. With proper guidance, this stage runs smoothly, leading to the final purchase agreement and closing.
How Your Practice is Valued
Owners often underestimate their practice’s true worth because they think in terms of revenue or tangible assets. Sophisticated buyers, however, value your practice based on its cash flow and future potential.
Beyond the “Rule of Thumb”
You may have heard of valuation “rules of thumb,” like a multiple of annual revenue. These are almost always inaccurate. The industry standard for valuation is based on a multiple of Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
The Power of Adjusted EBITDA
Adjusted EBITDA represents your practice’s true cash-generating ability. We calculate it by taking your net income and adding back taxes, interest, depreciation, and amortization. Then, we “normalize” it by adding back one-time expenses and any owner-related perks that aren’t essential to operations, such as a vehicle lease or above-market salary. A practice with $500k in net income could have an Adjusted EBITDA of $700k or more, significantly increasing its valuation.
What Buyers Pay For
The multiple applied to your Adjusted EBITDA depends on several factors: provider reliance (is the practice dependent on you?), payer mix, scale, and growth trajectory. A multi-provider practice with a strong growth profile in a desirable New York location will command a much higher multiple than a solo practice with flat revenue.
Planning for Life After the Sale
The transaction is not the end of the story. A well-planned exit strategy considers what happens after the closing date to protect your legacy, your team, and your financial future.
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Your Evolving Role. Do you want to retire immediately, or do you see yourself working for a few more years? Many deals, especially with private equity, involve the owner staying on as a clinical leader. Your desired role should be a key point of negotiation from the very beginning.
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Protecting Your Legacy and Team. For many owners, the well-being of their long-time staff and the continuity of care for their patients are top priorities. The terms of the sale can include provisions for retaining staff and a thoughtful transition plan. This ensures the practice you built continues to thrive.
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Understanding Your Payout. Your proceeds will likely come in different forms. While you’ll receive a significant amount of cash at closing, a portion may be structured as an “earnout” (paid if the practice hits future performance targets) or “rollover equity” (retaining a minority stake in the new, larger company). Understanding the risks and rewards of each is crucial for your long-term financial planning.
Frequently Asked Questions
What are the key steps to prepare my Orthopedic & Post-Surgical Rehab practice for sale in New York?
To prepare your practice for sale, start 2-3 years in advance by organizing financial statements, licenses, credentialing, and employee agreements. Define the deal structure (asset vs. entity sale) to understand tax and liability implications. Also, craft a compelling narrative that highlights your practice’s history, community reputation, referral network, and growth potential.
Who are the typical buyers for Orthopedic & Rehab practices in New York?
The main buyers are private equity firms aiming for growth and financial return, and strategic buyers such as hospital systems seeking to expand their service lines. Private equity buyers often seek scalable, profitable practices with strong management, while strategic buyers target practices with robust referral networks in key geographic areas.
How is the value of my practice determined?
Your practice is primarily valued based on Adjusted EBITDA, not just revenue or tangible assets. Adjusted EBITDA is net income plus taxes, interest, depreciation, and amortization, normalized to exclude one-time expenses and non-essential owner perks. The final valuation uses a multiple of Adjusted EBITDA, which varies based on provider reliance, payer mix, scale, and growth prospects.
What does the sale process involve in New York’s Orthopedic & Rehab market?
The sale process typically has four stages: 1) Valuation and preparation including document assembly; 2) Confidential marketing to vetted buyers; 3) Negotiation of offer terms and deal structure; and 4) Due diligence and closing where thorough buyer investigation occurs before finalizing the purchase agreement.
What should I consider about my role and payout after selling my practice?
Consider whether you want to retire immediately or continue working, potentially as a clinical leader with incentives, especially if selling to private equity. Protect your legacy and team by negotiating terms for staff retention and transition plans. Understand that payouts may include a mix of cash at closing, earnouts for future performance, and rollover equity, each with different risks and rewards.