A Guide to Maximizing Your Exit
The market for Sports Medicine & Performance Therapy practices is strong, especially in a vibrant, sports-focused city like New Orleans. For practice owners, this presents a significant opportunity. However, turning that opportunity into a successful exit requires careful planning and a clear understanding of your practice’s true value. This guide provides key insights into the process, from market conditions to post-sale planning, helping you navigate your transition with confidence.
Market Overview
The current environment for selling a therapy practice is very active. High demand in the physical therapy sector, driven in part by a shortage of qualified therapists, means strategic buyers and private equity groups are actively looking to acquire established practices. This creates a competitive landscape that can work in your favor.
The New Orleans Advantage
New Orleans offers more than just a market. It’s a location that buyers value. For a potential new owner planning to relocate, the city’s livable neighborhoods, culture, and job opportunities are significant draws. For a larger group looking to expand, the city’s passionate sports culture, from professional teams to university athletics, represents a built-in patient base and referral pipeline.
Profitability Potential
Well-run Sports Medicine practices are not just in demand; they are profitable. With strong management, it is possible for practices to achieve profit margins of over 10%. This financial health, combined with high buyer demand, creates a favorable moment for owners in the New Orleans area to consider their options.
Key Considerations
When a buyer looks at your Sports Medicine & Performance Therapy practice, they see more than just your revenue. They are assessing its stability, growth potential, and defensibility in the market. Preparing your practice for sale means understanding what they look for and presenting your strengths clearly.
Here are a few of the most important elements you should be thinking about:
- Your Referral Network. Do you have strong, documented partnerships with physician’s offices, orthopedic surgeons, or local sports teams like NOLA Gold Rugby? A stable referral base is one of the most powerful indicators of future success and a key driver of value.
- Service Diversification. What do you offer beyond traditional therapy? Services like massage therapy, performance training, or even product sales (protein powder, fitness gear) show diverse revenue streams and reduce reliance on insurance reimbursement alone.
- Team Specializations. Buyers pay a premium for expertise. If your therapists hold board certifications from the American Board of Physical Therapy Specialties or have unique skills in areas like orthopedics or sports-specific rehab, it makes your practice a more attractive acquisition target.
Market Activity
Merger and acquisition (M&A) activity in the therapy space remains high. This is not just a national trend; it has specific local drivers. The ongoing shortage of physical therapists means that acquiring an existing, fully staffed practice is often more efficient for a buyer than building one from the ground up. This dynamic creates a seller’s market, where well-prepared practices can attract multiple offers.
Strategic Buyers vs. Private Equity
You will likely encounter two main types of buyers. Strategic buyers are often larger therapy groups looking to expand their footprint in the New Orleans area. Private equity buyers are financial groups looking for a strong “platform” practice to invest in and grow. Understanding the goals of each is a key part of finding the right partner for your legacy, your staff, and your financial future.
The Sale Process
Selling your practice is a structured process, not a single event. While every deal is unique, the journey generally follows a clear path. Many owners I talk to are concerned about confidentiality, and rightly so. A well-managed process ensures that the sale is handled discreetly until the time is right, protecting your relationships with staff and patients.
The process typically involves these major steps:
1. Strategic Preparation. This is where we work with owners to understand their goals, analyze financials, and build the story that will attract the right buyers. Starting this 2-3 years before you want to sell is ideal.
2. Confidential Marketing. Your practice is presented, without revealing its identity, to a curated list of qualified buyers who have been vetted and signed non-disclosure agreements.
3. Negotiation and Offers. We help you evaluate offers, looking not just at the price but also at the terms, structure, and fit with your personal goals.
4. Due Diligence. The buyer will conduct a deep dive into your financials, operations, and legal standing. This is often where deals face challenges, and thorough preparation is critical to a smooth closing.
5. Closing and Transition. The final agreements are signed, and the plan for your transition, whether you are retiring or staying on for a period, is put into action.
Valuation
“What is my practice worth?” is the first question every owner asks. The answer is more complex than a simple formula. While industry benchmarks exist, such as valuing a practice at 60-75% of annual sales, a professional valuation digs much deeper to find the true number. It is not about what you think it’s worth, but what a sophisticated buyer is willing to pay.
We start by calculating your Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This process normalizes your profits by adding back one-time or owner-specific expenses to show the practice’s true cash flow. This single step can often significantly increase your practice’s perceived value. From there, a multiple is applied based on factors like size, specialty, and growth.
| Valuation Component | Description | Why It Matters |
|---|---|---|
| Adjusted EBITDA | Your practice’s real profit after normalizing for owner perks and one-time costs. | This is the foundational number for your entire valuation. Getting it right is everything. |
| Valuation Multiple | A multiplier (e.g., 5x) applied to your EBITDA, based on market data for similar practices. | Reflects market demand, risk, and growth potential. Varies by specialty and location. |
| Enterprise Value | The total value of your practice (Adjusted EBITDA x Multiple). | This is the headline number, from which final proceeds are calculated. |
| Net Proceeds | The cash you receive after subtracting any debt and transaction fees. | This is your take-home amount, which can be optimized with smart tax structuring. |
Post-Sale Considerations
A successful sale is not defined solely by the price you get at closing. It is also about what happens the day after. Your legacy, the future of your staff, and your own next chapter are all part of the equation. Thinking about these issues early in the process is one of the most important things you can do.
Many owners fear losing control. However, the structure of a deal can be designed to keep you involved if you wish. We specialize in finding partners who value physician leadership and can structure deals with equity rollovers. This allows you to retain ownership in the larger new entity, giving you a “second bite at the apple” when that entity is sold in the future.
Finally, the structure of your sale has major implications for your after-tax proceeds. A poorly structured deal can leave a surprising amount of your hard-earned value on the table for the IRS. Planning for tax efficiency from the very beginning is a critical part of maximizing what you ultimately take home.
Frequently Asked Questions
What makes New Orleans an attractive location for buyers of Sports Medicine & Performance Therapy practices?
New Orleans is attractive for buyers due to its livable neighborhoods, rich culture, and abundant job opportunities. Additionally, its passionate sports culture, including professional teams and university athletics, provides a built-in patient base and referral pipeline.
What are key factors buyers look for when evaluating a Sports Medicine & Performance Therapy practice in New Orleans?
Buyers assess more than just revenue; they look at the practice’s stability, growth potential, and market defensibility. Specific factors include a strong referral network with documented partnerships, service diversification beyond traditional therapy, and team specializations such as board certifications and unique skills.
How is the valuation of a Sports Medicine & Performance Therapy practice typically determined?
Valuation starts with calculating the Adjusted EBITDA, which normalizes profits by adding back owner perks and one-time expenses to reflect true cash flow. A valuation multiple based on market data is then applied to this EBITDA to determine the enterprise value. From this, net proceeds are calculated after deducting debts and transaction fees.
What are the typical steps involved in selling a Sports Medicine & Performance Therapy practice?
The sale process includes: 1) Strategic preparation to align goals and financial analysis, 2) Confidential marketing to vetted buyers, 3) Evaluation of offers considering price and terms, 4) Due diligence by buyers on financials and operations, and 5) Closing and transition which covers final agreements and post-sale planning.
How can practice owners maximize their after-sale proceeds and legacy?
Owners can maximize proceeds by preparing early, structuring deals for tax efficiency, and considering equity rollovers to retain ownership in a larger entity. This approach helps maintain involvement, enhances legacy, and provides potential future financial benefits, while also protecting staff and ensuring a smooth transition.
