Selling your Occupational Therapy practice is one of the most significant financial and personal decisions you will ever make. For practice owners in Chicago, the current market presents both unique opportunities and complex challenges. This guide offers a clear overview of the landscape, from understanding your practice’s true worth to navigating the sale process and securing your legacy. We aim to give you the clarity needed to move forward with confidence.
Market Overview
The Chicago market for therapy practices is active and dynamic. We are seeing a clear trend of consolidation, where larger, well-capitalized groups are acquiring established local practices to expand their footprint. This trend is a double-edged sword. It creates a competitive environment with motivated buyers, but it also means sellers are often negotiating with sophisticated teams that do this for a living.
A Competitive Landscape
Large players like Ivy Rehab are actively acquiring practices in Illinois, signaling strong buyer interest in the therapy space. This means your high-performing OT practice is likely an attractive asset. However, it also means you will be across the table from experienced negotiators.
Local Talent and Opportunity
At the same time, the Chicago metro area is home to a robust workforce of nearly 6,000 occupational therapists. This deep talent pool creates opportunities for various buyer types, from strategic groups to individual practitioners looking to acquire their first practice. Understanding this landscape is the first step toward positioning your practice for a successful sale.
Key Considerations
Beyond the numbers on a spreadsheet, the most successful practice sales are built on a foundation of careful planning. Selling is about more than just a transaction. It’s about the future you are building for yourself, your staff, and the patients you have served. Here are a few areas we find are most important to consider early in the process.
- Protecting Your Team and Legacy. Your staff is a critical asset. A buyer will want to see a stable, motivated team. Planning for their transition, and ensuring the buyer is a good cultural fit, protects your legacy and the value of the practice.
- Understanding Your Payer Mix. The blend of your insurance contracts and private pay patients is a key driver of value. A stable, well-managed payer mix is seen as less risky and more valuable than one that is heavily dependent on a single source.
- Documenting Your Clinical Edge. What makes your practice special? Is it a unique pediatric program, a strong reputation in hand therapy, or highly efficient patient workflows? Articulating this “story” is what separates a good valuation from a great one.
Market Activity
The demand for quality healthcare practices has attracted different kinds of buyers to the Chicago market, each with distinct goals. Knowing who might acquire your practice helps you prepare for the right conversations and negotiate effectively. The interest from private equity, in particular, has grown significantly since 2012, bringing new capital and new expectations to the table.
Understanding these buyer motivations is key to finding the right partner for your practice’s future.
| Buyer Type | Primary Goal | What This Means for You |
|---|---|---|
| Strategic Acquirers | Market expansion, adding locations or specialties. | They understand operations but may have a rigid integration plan. |
| Private Equity Firms | Financial return through growth and efficiency. | They bring resources but focus heavily on financial metrics like EBITDA. |
| Individual Practitioners | Owning their own practice, continuing a legacy. | May offer a more personal touch but often have limited financial backing. |
The Sale Process
A practice sale is a structured process, not a single event. While it can feel overwhelming, thinking of it in stages can provide clarity. Each step has its own challenges, and preparation is what prevents deals from failing unexpectedly.
- The Preparation Phase. This involves organizing your financial statements, key documents, and beginning to think about valuation. This is the foundation for everything that follows. We find that owners who start this process one to two years before a sale achieve the best outcomes.
- Confidential Marketing. Your practice is confidentially introduced to a curated list of vetted, qualified buyers. Your identity and the practice’s details are protected until a potential buyer signs a non-disclosure agreement.
- Navigating Due Diligence. This is the most intensive phase. The buyer will scrutinize your financials, operations, and legal standing. This is where most deals encounter unexpected hurdles if the practice is not properly prepared.
- Final Negotiations and Closing. The final step involves negotiating the definitive legal agreements and planning for a smooth transition of ownership.
Valuation
“What is my practice worth?” is the first question every owner asks. In the therapy world, you might hear “rules of thumb” based on revenue. Physical therapy practices, a close proxy, have recently sold for between 0.52x and 0.77x of revenue. However, sophisticated buyers don’t value you on revenue. They value you on profitability.
Beyond Revenue Multiples
The most important metric in a practice sale is Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents the true cash flow of your business by adding back owner-specific or one-time expenses to your net income. Things like an above-market owner’s salary or personal auto expenses are added back to show the practice’s real profitability.
The Power of Adjusted EBITDA
A practice with $500,000 in net income might have an Adjusted EBITDA of $700,000 or more once normalized. This higher number is what buyers apply a multiple to. Getting this calculation right is not an accounting exercise. It is the core of value creation and is the single biggest opportunity to increase your final sale price.
Post-Sale Considerations
Successfully closing the sale is a major milestone, but the journey isn’t over. The structure of your deal has long-term implications for your financial future and your team. Proactive planning for what comes next ensures the transition honors your hard work. We encourage owners to think through these critical questions.
- What is the transition plan for my team? A clear plan for how staff will be integrated is crucial for morale and the continued success of the practice.
- How will the sale be structured for tax efficiency? Decisions around earnouts, equity rollovers, and sale structure can dramatically impact your net proceeds.
- What are my personal goals after the transition? Whether you plan to stay on for a period, retire, or start a new venture, your goals should shape the deal structure, not the other way around.
Thinking about these elements early ensures your exit aligns with your personal, financial, and professional objectives.
Frequently Asked Questions
What is the current market environment for selling an Occupational Therapy practice in Chicago?
The Chicago market for therapy practices is active and dynamic, with a trend towards consolidation where larger groups acquire established local practices. This creates motivated buyers but also means sellers face experienced negotiators.
Who are the typical buyers interested in Occupational Therapy practices in Chicago?
Buyers include strategic acquirers aiming to expand market presence, private equity firms seeking financial returns through growth, and individual practitioners looking to own their own practice and continue a legacy.
What key factors should I consider before selling my Occupational Therapy practice?
Important considerations include protecting your team and legacy, understanding your payer mix, and documenting what makes your practice unique such as specialized programs or efficient workflows.
How is the value of an Occupational Therapy practice in Chicago typically determined?
Value is mostly based on profitability measured by Adjusted EBITDA rather than just revenue. Adjusted EBITDA reflects true cash flow by normalizing earnings and adding back owner-specific or one-time expenses.
What are important post-sale considerations to plan for?
Considerations include planning the transition for your staff, structuring the sale for tax efficiency, and aligning the deal with your personal and professional goals after the sale to ensure a smooth transition and financial security.
