Selling your Occupational & Hand Therapy practice is one of the most significant financial decisions you will ever make. For owners in Tennessee, the current market presents a unique opportunity, fueled by strong demand for therapy services. However, turning this opportunity into a successful outcome requires careful planning and a deep understanding of the process. This guide provides key insights into the market, valuation, and strategic steps to help you achieve an optimal value for the business you’ve built.
Market Overview
The market for therapy services in Tennessee is strong. This creates a favorable environment for practice owners who are considering a sale. The overall demand is not just a feeling; it’s backed by solid projections that should give you confidence.
Demand for Services
The U.S. Bureau of Labor Statistics projects an 11% job growth for Occupational Therapists nationwide through 2033. This is much faster than the average for all occupations. This underlying demand for skilled therapists and their services directly translates into a more attractive acquisitions market. Buyers are actively seeking established practices with a consistent flow of patients.
Buyer Interest
This healthy demand attracts a wide range of interested buyers, from local and regional therapy groups looking to expand their footprint to larger, private equity-backed platforms seeking to enter the Tennessee market. For a seller, this competition can drive up value, but only if your practice is properly positioned and the sale process is managed to create competitive tension.
Key Considerations
While the market is promising, a successful sale depends on the details of your specific practice. Before you go to market, we find it helps to focus on a few key areas that buyers will scrutinize heavily. Getting these right can significantly impact your final valuation.
-
Regulatory Cleanliness. Buyers will perform deep due diligence on your compliance with the Tennessee Board of Occupational and Physical Therapy’s rules. This includes everything from advertising to scope of practice, as defined in the Tennessee Code Title 63, Chapter 13. Any past or present issues can become major roadblocks. A clean record is a valuable asset.
-
Operational Strength. Your practice’s value is tied to its operational health. A diverse payor mix that isn’t overly reliant on one source, a strong and loyal patient referral base, and efficient billing and collections processes all demonstrate stability and predictability to a buyer.
-
Owner Dependence. Is the practices success tied entirely to you? Buyers pay a premium for businesses that can thrive without their founding owner. If you have associate therapists who manage patient loads and generate revenue, your practice becomes a much more attractive and valuable acquisition target.
Market Activity
Understanding who is buying practices like yours and why is a key piece of the puzzle. The therapy sector is seeing significant consolidation, which can work in your favor.
The Current Buyer Landscape
Sophisticated buyers, including private equity groups and large strategic operators, are actively looking for well-run Occupational and Hand Therapy practices in Tennessee. They are not just buying a job; they are buying a platform for growth. They look for practices with solid financials, a good reputation, and a strong team. This means they are often willing to pay a premium for quality assets.
The Best Time to Prepare is Now
Many practice owners tell us, “Im thinking about selling, but maybe in 2 or 3 years.” That is the perfect time to start the conversation. Buyers pay for proven performance, not future potential. The work you do in the years leading up to a sale to streamline operations and document growth is what builds a track record that commands the highest valuation. Starting the planning process now puts you in control of your timeline.
The Sale Process
A practice sale is not an event. It is a process that typically takes between 6 and 12 months from start to finish. Each stage requires careful management to protect confidentiality and maximize value. While every deal is unique, the journey generally follows a clear path.
| Stage | What Happens | Typical Timeline |
|---|---|---|
| 1. Preparation & Valuation | We normalize your financials and prepare marketing materials. | 1-2 Months |
| 2. Confidential Marketing | We identify and approach a curated list of qualified buyers. | 2-4 Months |
| 3. Due Diligence | The chosen buyer conducts an in-depth review of your practice. | 2-3 Months |
| 4. Closing | Attorneys finalize the legal agreements and funds are transferred. | 1-2 Months |
The due diligence stage is frequently where sales encounter unexpected hurdles. Proper preparation is the best way to ensure a smooth transition from an accepted offer to a successful closing.
Determining Your Practice’s Value
Many owners have heard of valuation “rules of thumb,” like a multiple of revenue. The reality is that sophisticated buyers don’t value practices that way. They focus on profitability, specifically a metric called Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents the true cash flow of your practice after normalizing for owner-specific expenses. We find most practices are undervalued until their financials are properly adjusted. Your final valuation will be this Adjusted EBITDA number multiplied by a specific factor, or “multiple.” The multiple is determined by several key factors:
- Growth Profile: Demonstrating consistent year-over-year growth in both revenue and patient volume will earn a higher multiple.
- Provider Base: A practice with multiple therapists is less risky and more valuable than a solo-practitioner model.
- Payer Mix: A healthy balance of government and commercial payers is seen as more stable than a heavy reliance on a single source.
- Referral Sources: A diversified network of referral sources is a significant strength that buyers will pay for.
Post-Sale Considerations
The day you sign the final papers is not the end of the journey. A well-planned transition ensures your personal and financial goals are met long after the sale is complete. Thinking about these issues early in the process is critical.
Protecting Your Legacy and Team
For many owners, the well-being of their long-time staff and the continuation of quality patient care are just as important as the final sale price. The right buyer will share these values. We help you structure transition plans and negotiate terms that protect your team and ensure your legacy of care continues.
Tax-Efficient Structures
How your sale is structured has massive implications for your after-tax proceeds. An Asset Sale versus an Entity Sale can result in a difference of hundreds of thousands of dollars in your pocket. Furthermore, many deals today involve components like rollover equity, where you retain a stake in the new, larger company. This provides a potential “second bite of the apple” but requires careful planning. Aligning the deal structure with your personal financial goals is one of the most important services an advisor provides.
Frequently Asked Questions
What is the current market outlook for selling an Occupational & Hand Therapy practice in Tennessee?
The market for therapy services in Tennessee is strong, driven by solid demand and job growth projections for Occupational Therapists. This creates a favorable environment for practice owners considering a sale, with active buyers seeking established practices.
What key factors impact the valuation of an Occupational & Hand Therapy practice in Tennessee?
Valuation focuses on profitability measured by Adjusted EBITDA, rather than just revenue multiples. Key factors influencing the multiple include consistent growth, multiple therapists/provider base, a healthy payer mix, and a diversified referral network.
How long does the sale process typically take for an Occupational & Hand Therapy practice in Tennessee?
The sale process usually takes between 6 and 12 months, involving four main stages: Preparation & Valuation (1-2 months), Confidential Marketing (2-4 months), Due Diligence (2-3 months), and Closing (1-2 months).
What should practice owners in Tennessee do to prepare for selling their Occupational & Hand Therapy practice?
Owners should focus on regulatory compliance, operational strength, and reducing owner dependence. Cleaning up regulatory issues, diversifying payors, building referral bases, and proving the practice can succeed without the owner increase attractiveness and valuation.
What post-sale considerations should sellers keep in mind when selling an Occupational & Hand Therapy practice in Tennessee?
It is important to plan for a smooth transition that protects the legacy, staff, and patient care quality. Sellers should also consider tax-efficient deal structures, including differences between asset and entity sales, and potential equity rollover opportunities to maximize after-tax proceeds.
