Your Houston Orthopedic & Post-Surgical Rehab practice sits in one of the nation’s most active healthcare markets. The demand for specialized physical therapy is strong, creating a significant window of opportunity for practice owners considering a sale. However, turning this market potential into a successful exit requires a strategic approach. This guide offers insights to help you understand the landscape and prepare for your next chapter.
Market Overview
The market for selling a rehab practice in Houston is exceptionally strong. Broader trends support this. The U.S. outpatient rehabilitation market is already valued at over $30 billion and continues to grow. Texas, in particular, is a hotspot. The state projects a 28% growth in employment for physical therapists by 2030. Your location in Houston places you at the center of this activity.
A Growing Demand for Rehab Services
Houston’s large and aging population, combined with its status as a world-class medical center, fuels a constant need for orthopedic and post-surgical rehabilitation. This creates a stable and predictable patient base that is very attractive to potential buyers who are looking for reliable revenue streams.
A Hub for Major Acquirers
Houston is not just a major healthcare market. It is also home to the headquarters of large, publicly traded physical therapy companies. These groups are actively acquiring practices to expand their footprint. This local presence of sophisticated buyers means there is a ready and competitive market for well-run practices like yours.
Key Considerations for Sellers
A strong market is a great starting point, but the value of your specific practice depends on its unique strengths. Buyers in the Houston area will look closely at several key areas. Getting these parts of your story right is critical. Here is what we see them focus on most.
- Your Referral Network. Can you show consistent patient flow from a diverse group of local orthopedic surgeons and hospitals? A reliable referral base is one of the most valuable assets you can have.
- Your Team’s Strength. An experienced and loyal staff reduces the risk for a new owner. Highlighting the tenure and qualifications of your key therapists can have a major impact on buyer confidence.
- Your Operational Story. How efficient is your practice? A buyer will want to see clean financial records, modern EMR systems, and well-managed billing and scheduling processes. This demonstrates a professional operation.
Market Activity
The Houston M&A market is not just growing. It is also evolving. Two types of buyers are shaping the landscape for orthopedic rehab practices, and knowing who they are is key to your strategy. This competition is great news for sellers. It often leads to better valuations and more favorable deal terms when managed correctly.
The Rise of Strategic Buyers
Large, established physical therapy companies are on the lookout for practices that can help them grow their market share. These “strategic” buyers, some with headquarters right here in Houston, are frequently acquiring single and multi-clinic practices. They are looking for well-run clinics that can be easily integrated into their larger network.
Private Equity’s Entry
At the same time, private equity (PE) firms have become very interested in the rehab space. They see the industry’s strong fundamentals as a great investment. PE buyers often look for practices that can serve as a “platform” for future growth, and they may offer partnership opportunities that allow owners to retain some equity.
The Sale Process
Selling your practice is not a single event. It is a structured process with distinct stages. Understanding this path helps you prepare and avoid common pitfalls, especially during the due diligence phase where many deals encounter problems. While every sale is unique, most follow a similar framework. We find it helpful to think about the process in five main stages.
| Sale Stage | Key Objective |
|---|---|
| 1. Preparation | Get financials in order and build the story of your practice. |
| 2. Marketing | Confidentially identify and approach the right potential buyers. |
| 3. Negotiation | Review offers and negotiate the best price and terms. |
| 4. Due Diligence | Provide documents and data for the buyer’s detailed review. |
| 5. Closing | Finalize legal agreements and successfully transition ownership. |
Understanding Your Practice’s Valuation
One of the first questions every owner asks is, “What is my practice worth?” The answer is more complex than a simple rule of thumb. Sophisticated buyers don’t just look at your revenue. They look at your profitability and your growth story. Most practices are actually undervalued until their financials are properly prepared for a buyer9s review.
Beyond the Balance Sheet
The most important metric in a practice sale is Adjusted EBITDA. This stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. The “Adjusted” part is key. It means we add back owner-specific expenses, like a car lease or an above-market salary, to show the true cash flow of the business. This figure gives a buyer a clear picture of the practice’s underlying profitability.
What Drives Your Multiple?
Your Adjusted EBITDA is then multiplied by a number, the “multiple,” to determine your practice’s total value. That multiple can range widely, from 3x for a small practice to over 7x for a larger one. This is not arbitrary. The multiple is higher for practices with multiple providers, a strong growth history, and a good mix of insurance payers. Buyers pay more for businesses they see as less risky and having more upside.
Post-Sale Considerations
A successful sale is about more than the final price. It is also about ensuring your legacy is protected and your personal goals are met. Many owners worry about losing control, but the right deal structure can preserve what matters most to you. It is important to think about what you want your life and your practice to look like after the papers are signed.
- Your Future Role. Do you want to retire immediately, or would you prefer to continue practicing for a few years? Your desired role will shape the negotiation and the type of buyer that is the best fit.
- The Deal Structure. Not all of the money may come at closing. Some deals include an “earnout,” where you receive additional payments for hitting performance targets. Others involve “rollover equity,” where you keep a stake in the larger company, giving you a chance for a second payout later.
- Your Team’s Transition. You have spent years building a great team. A good transition plan ensures your staff feels secure and understands their future with the new owner. This is a critical part of protecting the practice you built.
Frequently Asked Questions
What makes Houston a strong market for selling an Orthopedic & Post-Surgical Rehab practice?
Houston is one of the nation’s most active healthcare markets with strong demand for specialized physical therapy. The city has a large and aging population, a world-class medical center, and is home to headquarters of major physical therapy companies actively acquiring practices. Texas projects a 28% growth in employment for physical therapists by 2030, making Houston a hotspot for rehab services.
What key factors do buyers consider when evaluating a rehab practice in Houston?
Buyers focus on several critical aspects: 1) Your referral network—consistent patient flow from diverse orthopedic surgeons and hospitals; 2) Your team’s strength—experienced, loyal staff reduces risk; 3) Your operations—efficient management with clean financials, modern EMR systems, and well-run billing and scheduling.
Who are the main types of buyers in the Houston rehab practice market?
There are two main types of buyers: strategic buyers and private equity (PE) firms. Strategic buyers are large physical therapy companies looking to expand by acquiring well-run clinics. PE firms view the sector as a strong investment and often seek practices that can serve as platforms for growth, sometimes offering partnership and equity retention options to owners.
How is the valuation of an Orthopedic & Post-Surgical Rehab practice determined?
Valuation is based on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) which reflects true cash flow by adding back owner-specific expenses. This figure is multiplied by a multiple that varies based on practice size, growth history, provider count, and insurance payer mix. Multiples range from around 3x for small practices to over 7x for larger, less risky, high-growth clinics.
What should sellers consider about their role and deal structure after selling their practice?
Sellers should clarify whether they want to retire immediately or continue practicing post-sale. Deal structures may include earnouts (additional payments based on performance) and rollover equity (retaining a stake in the company for future payout). Planning a smooth team transition is crucial to ensure staff security and protect the practice’s legacy.
