Selling your neurological rehabilitation practice is one of the most significant decisions of your career. In Sacramento, the market is active, and buyers are looking for well-run practices with strong reputations. This guide provides a clear overview of the market, what buyers are looking for, and how you can prepare for a successful transition. We will walk you through the key factors that drive value and the steps involved in the sale process, helping you move forward with confidence.
Market Overview: A Vibrant Landscape in Sacramento
The Sacramento market for neurological rehabilitation services is not just stable; it is growing. This creates a favorable environment for practice owners who are considering a sale. You are in a strong position, and understanding the market dynamics is the first step toward leveraging that strength.
Strong Local Demand
Large healthcare systems are making significant investments in the Sacramento area. We have seen the launch of a new $77 million neuro-rehab hospital and UC Davis Healths opening of a 52-bed rehabilitation hospital. This level of investment is a clear signal. It tells us that major players see long-term value and growing demand for neurological care right here in our community. For an independent practice owner, this means your services are more valuable than ever.
Favorable National Trends
This local growth is backed by a powerful national trend. The global neurorehabilitation market is projected to grow by over 13% annually. This is not a fleeting moment. It is a sustained shift driven by an aging population and advancements in treatment. The activity in Sacramento is part of a much larger, healthier industry trend, which gives buyers confidence when looking to acquire a practice like yours.
Key Considerations for Your Practice
While the market is strong, a buyer is not just acquiring a spot on the map. They are buying the specific, unique value your practice has built. Before you sell, it is important to take stock of what makes your practice attractive.
Here are a few key areas that sophisticated buyers will examine closely:
- Your Clinical Niche. Do you have a strong reputation in a specific area like traumatic brain injury, stroke recovery, or pediatric neuropsychology? A focused specialty is often more attractive than a generalist approach, as it can command a loyal referral base and higher reimbursement rates.
- Your Team’s Expertise. A practice that relies entirely on the owner has a higher perceived risk. A strong team of qualified therapists, especially those with credentials like a neurologic clinical specialist (NCS), makes your practice far more valuable. It demonstrates operational maturity and continuity of care after you transition out.
- Your Physical Assets and Technology. The quality of your facility and equipment matters. A practice with modern, specialized technology for neurological rehabilitation is a more turnkey operation for a buyer. It shows you have invested in quality patient care and operational excellence.
Market Activity: Who Is Buying in Sacramento?
The heavy investment in Sacramento’s neuro-rehab sector means there are more buyers than you might think. These buyers have different goals, which will influence what they are willing to pay and how a deal might be structured. Understanding who is at the table is key to finding the right fit for your legacy and financial goals.
| Buyer Type | What They Typically Seek |
|---|---|
| Hospital Systems | A direct pipeline of patients to support their new, larger facilities and a way to expand their community footprint. |
| Private Equity Platforms | A strong, profitable practice to serve as a “platform” for future growth, with a focus on operational efficiency and EBITDA. |
| Strategic Competitors | Neighboring practices or regional groups looking to increase market share, absorb a proven team, and consolidate referral networks. |
Finding the right buyer is not about taking the first offer. It is about running a process that creates a competitive environment among these different groups. This is how you can achieve a premium valuation while ensuring your practice goes to a partner who will protect what you have built.
The Sale Process: A Step-by-Step Overview
The process of selling a medical practice can seem complex, but it follows a logical path. The entire process is managed under strict confidentiality to protect your staff, patients, and professional reputation. Here is a simplified look at the major stages.
- Preparation and Valuation. This is the foundation. It involves organizing your financial statements and getting a professional valuation to understand your practice’s true market worth. This is not just about revenue; it is about profitability.
- Confidential Marketing. We do not “list” your practice publicly. We create a professional summary (without identifying you) and present the opportunity to a curated list of qualified buyers who have signed a non-disclosure agreement (NDA).
- Negotiation and Due Diligence. Once offers are received, we help you negotiate the best terms. The chosen buyer then conducts due diligence, where they verify the financial and operational details of your practice. Proper preparation makes this stage go smoothly.
- Closing and Transition. This final phase involves the legal documentation to close the sale. We also help you develop a transition plan to ensure a seamless handover for your team and patients, protecting your legacy.
Understanding Your Practice’s Valuation
One of the first questions every owner asks is, “How much is my practice worth?” While you may hear rules of thumb based on revenue, sophisticated buyers use a more precise method centered on your practice’s profitability.
What is Adjusted EBITDA?
The most important metric is Adjusted EBITDA. Think of it as your practice’s true cash flow. It starts with your net income and adds back interest, taxes, depreciation, amortization, and any owner-specific or one-time expenses (like a personal car lease or an above-market salary). This number shows a buyer the actual profit the business generates.
What is a Valuation Multiple?
Your practice’s value is then determined by applying a “multiple” to your Adjusted EBITDA. This multiple is not a fixed number. It increases based on factors like the strength of your team, your growth potential, and your payer mix. A solo practice might receive a 4x multiple, while a multi-provider practice with a strong growth story could command a 7x multiple or higher. An accurate valuation is the foundation for a successful sale strategy.
Post-Sale Considerations: Planning for What’s Next
A successful transaction is about more than just the sale price. It is about how the deal is structured to meet your long-term goals. Thinking about this from the start is critical for protecting your wealth and legacy.
Here are a few things to plan for:
- Your Legacy and Staff. A well-structured deal includes a transition plan that takes care of your dedicated team and ensures your patients continue to receive excellent care. This is a key part of protecting the reputation you have spent a career building.
- Your Financial Future. The way a sale is structured has massive tax implications. Planning ahead can significantly increase your after-tax proceeds, putting more of your hard-earned money in your pocket.
- Your Ongoing Role. You have options. You could retire immediately, or you could agree to stay on for a period to ensure a smooth transition. Some owners choose to “roll over” a portion of their equity into the new company, giving them a chance for a “second bite of the apple” when the larger entity sells again in the future.
Every practice sale is unique. The right strategy depends entirely on your personal and financial objectives.
Frequently Asked Questions
What is the current market outlook for selling a neurological rehabilitation practice in Sacramento, CA?
The Sacramento market for neurological rehabilitation practices is strong and growing, supported by significant local investments like the new $77 million neuro-rehab hospital and UC Davis Health’s rehabilitation facility. This growth signals a favorable environment for practice owners considering a sale.
What key factors do buyers look for when purchasing a neurological rehabilitation practice?
Buyers focus on factors like the practice’s clinical niche (e.g., traumatic brain injury or stroke recovery), the expertise and credentials of the therapy team, and the quality of physical assets and technology. These elements demonstrate specialized care, operational maturity, and investment in patient quality.
Who are the typical buyers of neurological rehabilitation practices in Sacramento?
Typical buyers include hospital systems seeking patient pipelines to support large facilities, private equity platforms aiming for profitable practices to grow operationally, and strategic competitors like neighboring practices or regional groups wanting to expand market share and referral networks.
How is the value of a neurological rehabilitation practice typically determined?
The value is based on Adjusted EBITDA, which reflects true cash flow by adjusting net income for expenses and owner-specific costs. This figure is then multiplied by a valuation multiple that depends on factors like team strength, growth potential, and payer mix. Multiples range from about 4x for solo practices to 7x or more for multi-provider practices with growth.
What should practice owners consider after selling their neurological rehabilitation practice?
Owners should plan for their legacy and staff by ensuring a smooth transition, consider the financial impact of deal structures on taxes to maximize after-tax proceeds, and decide on their ongoing role, which could include retiring, staying on temporarily, or retaining equity for future gains.
