Selling your Occupational or Hand Therapy practice is one of the most significant financial and personal decisions you will make. In Kentucky, a growing market offers unique opportunities, but realizing your practice’s full value requires informed navigation. This guide provides a clear overview of the market, the sale process, and the key factors that will define your success, helping you understand how to prepare for a successful and profitable transition.
Curious about what your practice might be worth in today’s market?
The Current Market for Therapy Practices in Kentucky
The therapy sector is a strong and growing part of the national healthcare landscape. Occupational and Hand Therapy practices are part of a massive $53 billion industry. The broader therapy field is projected to grow by 14% over the next decade. This creates a compelling environment for practice owners in Kentucky considering a sale.
This underlying growth has attracted attention from a range of buyers, from other local providers looking to expand to sophisticated private equity groups. For you, this means there is likely active interest in a well-run practice. The key is understanding how to position your practice to attract the best type of buyer for your specific goals.
Timing your practice sale correctly can be the difference between average and premium valuations.
Key Considerations Before You Sell
Before you even think about putting your practice on the market, there are a few critical factors to get in order. In Kentucky, CPOM compliance is a major one. The “Corporate Practice of Medicine” doctrine has specific rules about who can own a medical entity, and you must understand how these regulations apply to your OT practice to ensure a smooth transaction.
Beyond legal structures, buyers will scrutinize your financial health and staff stability. They want to see clean financial records and key metrics like a low number of days in accounts receivable. They are also buying your team. A stable, experienced staff with the right credentials, like Certified Hand Therapists (CHTs), is a tremendous asset that adds significant value and provides a buyer with confidence.
The due diligence process is where many practice sales encounter unexpected challenges.
What Market Activity Looks Like
You might not see billboards advertising practice sales, but the market in Kentucky is active. We see transactions happening at multiple levels, from smaller clinics being acquired by local competitors to larger platforms being bought by investment groups.
Private Equity Interest
Private equity firms are increasingly active in acquiring therapy practices. They are drawn to the industry’s consistent growth and opportunities for consolidation. These buyers are typically looking for well-organized practices with strong profitability that can serve as a “platform” for future growth. They bring financial resources but also a different operational mindset.
Local and Regional Buyers
At the same time, successful local and regional therapy groups are looking to grow their footprint. A practice in Owensboro was recently purchased by a new owner, showing that these independent transactions are common. These buyers often understand the local market intimately and may be focused on preserving a practice’s community legacy. Knowing the right buyer type for you is a critical first step.
Finding the right type of buyer for your practice depends on your specific goals.
Understanding the Sale Process
Selling a practice isn’t like selling a house. It s a multi-stage journey that requires careful management. The process generally begins with thorough preparation, where you work with an advisor to organize your financials and legal documents. This leads to a formal valuation, which establishes a credible asking price based on your real performance, not just a rule of thumb. From there, the process moves into confidential marketing, buyer negotiations, and finally, due diligence. This final stage is where many deals fall apart if the initial preparation was not done correctly. A buyer will verify every detail of your practice, and any surprises can erode trust and value.
A comprehensive valuation is the foundation of a successful practice transition strategy.
How Your Practice is Valued
So, what is your practice actually worth? Sophisticated buyers look past your net income and focus on a metric called Adjusted EBITDA. This stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, with “adjustments” made to normalize for any owner-related expenses that wouldn’t continue under new ownership.
Your Adjusted EBITDA is then multiplied by a specific number, or “multiple,” to determine your practice’s enterprise value. This multiple is not arbitrary; it changes based on market conditions and specific risk factors.
| Factor | Impact on Valuation Multiple |
|---|---|
| Provider Dependence | A practice reliant on a single owner has a lower multiple. |
| Staff & Specialization | An experienced, multi-provider team with CHTs earns a higher multiple. |
| Financials | Clean, documented financials and consistent growth increase the multiple. |
| Referral Sources | Diverse and stable referral streams are valued more than a single source. |
Most owners are surprised to learn their practice is worth more than they thought once their financials are properly normalized and their story is framed correctly.
Valuation multiples vary significantly based on specialty, location, and profitability.
Life After the Sale
The deal isn’t over once the papers are signed. Planning for what comes next is a critical part of the process that should begin early. A well-structured transition plan is needed to ensure a smooth handover for your staff and patients, protecting the legacy you’ve built. The structure of your sale also has major tax implications. How a deal is structured can dramatically change your net proceeds, and this must be considered long before you close. Finally, many deals today involve more than just cash. You may be offered an “earnout” based on future performance or the chance to “roll over” equity and partner with the new owner for future growth. Understanding these options is key to maximizing your outcome.
Every practice sale has unique considerations that require personalized guidance.
Frequently Asked Questions
What is the current market outlook for Occupational & Hand Therapy practices in Kentucky?
The therapy sector, including Occupational and Hand Therapy, is part of a robust $53 billion industry in the U.S. and is projected to grow by 14% over the next decade. In Kentucky, this growth has attracted interest from local providers and private equity groups, creating a fertile environment for selling well-run practices.
What key legal considerations should I be aware of before selling my therapy practice in Kentucky?
A major legal consideration is CPOM compliance. The Corporate Practice of Medicine doctrine in Kentucky restricts who can own medical entities. Understanding these regulations is crucial to ensure a smooth transaction without legal issues.
How do buyers typically value an Occupational & Hand Therapy practice?
Buyers focus on Adjusted EBITDA, which accounts for earnings before interest, taxes, depreciation, and amortization, adjusted for owner-related expenses. This figure is multiplied by a market-driven multiple influenced by factors such as provider dependence, staff specialization, financial health, and referral sources.
Who are the typical buyers interested in therapy practices in Kentucky?
Buyers range from local and regional therapy groups looking to expand their footprint to private equity groups interested in acquiring profitable, well-organized practices for a platform of future growth. Local buyers often prioritize preserving community legacy, while private equity buyers bring financial resources and operational expertise.
What steps should I take to prepare my practice for sale to maximize its value?
Preparation includes ensuring CPOM compliance, maintaining clean and documented financial records, stabilizing your staff particularly with credentials like Certified Hand Therapists (CHTs), and having a clear understanding of your practice’s financial and operational metrics. Early planning for transition and tax implications is also critical for a successful sale.