The market for Applied Behavior Analysis (ABA) services is growing, and Michigan is a key area of expansion. This creates a significant opportunity for owners of home-based ABA practices considering a sale. This guide provides a clear overview of the Michigan market, what buyers look for, and how to navigate the sale process from valuation to closing. Successfully transitioning your practice requires careful planning and a deep understanding of today’s acquisition landscape.
Market Overview
If you own a home-based ABA practice in Michigan, you are in a strong position. The market is favorable for sellers right now, driven by a few key factors. The U.S. ABA market was valued at over $4 billion in 2023 and continues to expand, meaning more sophisticated buyers are looking to enter or grow in this space.
Specifically in Michigan, the environment is supportive.
- State-Level Support: Michigan is actively expanding access to ABA services through state programs and advocacy, increasing demand.
- Medicaid Endorsement: The state’s own Medicaid guidelines explicitly support home-based services as a preferred model of care, validating your operational structure.
- Growing Need: Awareness and diagnosis of Autism Spectrum Disorder continue to rise, ensuring a sustainable need for quality providers.
This all points to a healthy, active market for well-run practices like yours.
Key Considerations for Michigan Sellers
While the market is strong, selling a healthcare practice in Michigan involves navigating specific state regulations. Getting these details right is crucial for a smooth transaction. Buyers will scrutinize your compliance during due diligence, and any issues can delay or even kill a deal.
State Licensing Rules
As you know, practicing ABA in Michigan requires a state license under MCL 333.18253. Buyers will conduct a thorough review to ensure all your clinicians, including yourself, are properly licensed and in good standing. Any gaps in credentialing records must be addressed before you go to market.
Corporate Practice of Medicine (CPOM)
This is a critical, and often overlooked, hurdle in Michigan. The CPOM doctrine can restrict who is allowed to own a medical practice. For ABA, this often means the practice must be owned by a licensed BCBA. If your practice is not structured correctly, it can make a sale to a non-clinician-owned buyer, like a private equity group, very difficult. We find that navigating CPOM requires specific legal and transactional structures to ensure compliance.
Every practice sale has unique considerations that require personalized guidance.
Market Activity
You do not need to look far to see that private equity and other large strategic buyers are very interested in the ABA space. This high level of M&A activity is a double-edged sword. On one hand, it creates a competitive environment where you can receive premium valuations. On the other, not all buyers are created equal. The high-profile bankruptcy of a large, PE-backed ABA company serves as a reminder to prioritize a partner’s stability and cultural fit, not just the headline number.
This market activity means a few things for you:
- High Demand: There are likely multiple buyers who would be interested in your practice.
- Valuations Are Strong: Competition among buyers is driving up valuation multiples.
- Partner Quality Matters: Your legacy depends on finding a buyer who will maintain your standard of care and support your staff.
Running a structured process is the best way to generate interest from multiple qualified buyers and choose the partner who aligns with your financial and personal goals.
The Sale Process
Selling your practice follows a clear, structured path. While every deal is unique, the journey generally moves through four key phases. Properly preparing for each stage is the key to preventing surprises and keeping the momentum going. The due diligence phase, in particular, is where a buyer’s professional team will scrutinize every aspect of your business. Being prepared is not optional.
Here is a simplified look at the process.
| Phase | What It Involves | Key for a Seller |
|---|---|---|
| 1. Preparation | Gathering financial and operational documents, getting a professional valuation. | Having clean books and understanding your practice’s true value. |
| 2. Marketing | Anonymously marketing the practice to a curated list of qualified buyers. | Maintaining confidentiality to protect staff and client relationships. |
| 3. Due Diligence | The chosen buyer investigates your finances, operations, and compliance. | Being organized and responsive to prevent delays or loss of trust. |
| 4. Closing | Finalizing legal documents, transferring ownership and funds. | Ensuring a smooth transition plan is in place for staff and clients. |
The due diligence process is where many practice sales encounter unexpected challenges.
Understanding Your Practice’s Value
A common question we hear is, “What is my practice worth?” The answer is more complex than a simple revenue multiple. Sophisticated buyers value your practice based on its profitability and future potential, a metric known as Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This isn’t just the profit on your tax return. We calculate it by adding back personal expenses run through the business or a one-time large expense that won’t recur. Getting this number right is the foundation of your entire sale.
Beyond that number, buyers pay more for practices that have:
- A strong clinical team of BCBAs and RBTs that doesn’t rely solely on the owner.
- Good contracts with a diverse mix of insurance payers.
- Efficient operations for scheduling, billing, and compliance in a home-based setting.
A professional valuation tells the story of your practice in a way that buyers understand and are willing to pay a premium for. Most owners are surprised to learn their practice is worth more than they thought once it’s properly analyzed.
A comprehensive valuation is the foundation of a successful practice transition strategy.
Post-Sale Considerations
The deal is not done when the papers are signed. A successful transition protects your legacy, your staff, and the clients you have served. Planning for what happens after the sale is just as important as negotiating the price. You should work with your buyer and advisor to create a clear plan.
Your primary considerations should be:
- Staff and Client Communication: Developing a joint plan with the buyer on how and when to announce the sale to ensure continuity of care and retain your key employees.
- Your Future Role: Deciding what you want your involvement to be. Will you stay on for a transition period? Will you retain some equity in the new company (a “rollover”)?
- Financial Integration: Understanding how any seller financing or earn-out payments will be structured and tracked to ensure you receive the full value you negotiated.
Thinking through these points beforehand ensures your transition out of ownership is as successful and smooth as the years you spent building your practice.
Your legacy and staff deserve protection during the transition to new ownership.
Frequently Asked Questions
What makes Michigan a good market for selling a home-based ABA practice?
Michigan is favorable due to active state support expanding access to ABA services, Medicaid endorsement of home-based care, and a rising demand driven by increasing Autism Spectrum Disorder diagnoses.
What are the licensing requirements to sell a home-based ABA practice in Michigan?
Selling a practice requires compliance with Michigan’s licensing rules under MCL 333.18253. All practicing clinicians, including the owner, must be properly licensed and in good standing before the sale.
How does the Corporate Practice of Medicine (CPOM) doctrine affect the sale of ABA practices in Michigan?
CPOM restricts who can own a medical practice in Michigan, often requiring a licensed BCBA to be an owner of an ABA practice. This limits sales to non-clinician buyers unless legal and transactional structures ensure compliance.
What factors most influence the valuation of a home-based ABA practice in Michigan?
Valuation is based on profitability and future potential (Adjusted EBITDA), a strong clinical team, diverse insurance contracts, and efficient home-based operations like scheduling and billing.
What should sellers plan for after the sale of their Michigan home-based ABA practice?
Sellers should prepare for smooth staff and client communication, decide their ongoing role (transition support or equity rollover), and understand financial integration details such as seller financing or earn-out payments.