Selling your Occupational & Hand Therapy practice is one of the most significant financial decisions you’ll make. For owners in the San Francisco Bay Area, the current market presents both strong opportunity and unique complexities. This guide provides a clear overview of the market landscape, key financial and legal considerations, and the steps involved in a successful sale. I want to help you understand the path forward so you can make the best decision for your future.
Market Overview
The timing for considering a sale is strong. The market for therapy services is not just stable; it’s expanding at an impressive rate.
National Trends
Nationally, the Occupational and Physical Therapy market is projected to grow by a compound annual rate of 10.1% through 2032. This growth is fueled by an aging population and wider acceptance of therapy as a core part of recovery and wellness. Buyers, from private equity firms to regional health systems, are actively seeking to invest in this space. They see the long-term value and stability your practice represents.
The San Francisco Picture
Here in the Bay Area, the demand is clear. With over 1,500 occupational therapists in the metro area, San Francisco is a hub for talent and innovation. However, this also means the market is competitive. To attract premium offers, your practice must stand out. Buyers look for businesses that are not just profitable but also well-run and have a distinct position in the community. It’s not enough to be good; you have to show why you’re a great investment.
Key Considerations
Before you even think about putting your practice on the market, getting your house in order is the most important step. In my experience, sellers who do this preparation work achieve better outcomes and face fewer surprises during due diligence. Here are three areas to focus on.
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Your Legal Structure
California has specific rules. Your Occupational Therapy practice likely needs to be a California Professional Corporation. If it’s currently structured as an LLC or another entity, this will need to be addressed before a sale. This is a common hurdle that can cause significant delays if not handled properly and well in advance. -
Financial Clarity
Buyers will scrutinize your finances. You need clean, accurate, and easily understandable financial statements for the last three years. This isn’t just about tax returns. It’s about having clear Profit & Loss statements and Balance Sheets that tell the story of your practice’s profitability and health. -
Regulatory Compliance
Ensure all therapist licenses are current with the California Board of Occupational Therapy (CBOT). This includes any specialized credentials for hand therapy. A buyer’s due diligence will verify this, and any lapses can become a major red flag that jeopardizes the deal.
Market Activity
You won’t find a public list of recent Occupational & Hand Therapy practice sales in San Francisco. These transactions are almost always confidential. However, we see consistent activity behind the scenes. The buyers generally fall into two categories, and understanding their motivations is key to positioning your practice.
| Buyer Type | Their Primary Goal | What This Means For You |
|---|---|---|
| Strategic Buyers | To expand their geographic footprint or service lines. They are often other therapy providers. | They understand the clinical side of your business and may want to integrate your team and location into their existing brand. |
| Financial Buyers | To invest in a profitable platform with growth potential. These are often Private Equity (PE) groups. | They focus heavily on the numbers (EBITDA) and may offer partnership models (like equity rollovers) to keep you involved in the growth. |
The right buyer for you depends entirely on your personal and financial goals. Do you want a clean exit, or are you interested in a potential “second bite of the apple” by partnering for future growth? A well-run process will create competition between these buyer types, giving you more options.
Sale Process
People often ask me what the sale process actually involves. While every deal is unique, the journey follows a well-defined path. The key is to manage each stage with discipline and foresight. Preparing for these steps years in advance is what separates an average outcome from a great one.
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Valuation and Preparation
This is the foundation. We work with you to analyze your financials, understand your practice’s strengths, and determine a realistic market value. This phase also involves assembling all the documents a buyer will want to see. -
Confidential Marketing
We don’t just “list” your practice. We create a confidential marketing plan to approach a curated list of qualified strategic and financial buyers, telling the story of your practice in a way that highlights its value. -
Negotiation and Structuring
Once offers are received, the negotiation begins. This is about more than just the price. It’s about negotiating the terms of the deal, from the transition plan for your staff to the structure of your payout. -
Due Diligence and Closing
The chosen buyer will conduct a deep-dive review of your practice (due diligence). With proper preparation, this stage should be smooth. We manage the process through to the final signing of documents and the successful closing of the sale.
Valuation
“What is my practice worth?” This is the first question every owner asks. While many have heard of rules of thumb, like a multiple of revenue, sophisticated buyers look much deeper.
Revenue vs. Earnings
A practice with $2 million in revenue is not valued the same as another with $2 million in revenue. Buyers care about profitability. The key metric they use is Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This number represents the true cash flow of your business. While a specialty practice like yours might trade for 0.8x to over 1.0x annual revenue, the real valuation will be based on a multiple of your Adjusted EBITDA.
The Power of Adjustments
This is where many owners undervalue their practices. Your reported net income isn’t the whole story. We analyze your expenses to “add back” items that a new owner wouldn’t incur. These can include your above-market salary, personal vehicle expenses run through the business, or one-time costs. Normalizing these expenses can often increase your Adjusted EBITDA significantly, which directly leads to a higher valuation. Many owners are surprised to learn their practice is worth much more than they thought.
Post-Sale Considerations
Selling your practice isn’t just a transaction. It’s a transition for you, your team, and your patients. Thinking about life after the sale is a critical part of the planning process. A good deal is structured to protect not only your financial future but also your legacy.
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Your Team and Patients
A smooth handover is vital. A key part of our negotiation is ensuring the transition plan respects your staff and provides continuity of care for your patients. This protects the goodwill you’ve spent years building. -
Your Ongoing Role
Do you want to leave immediately, or would you prefer to stay on for a year or two? Many buyers, especially financial ones, prefer the seller to remain for a transition period. This is a key negotiation point that impacts the deal structure and your own plans. -
The Structure of Your Payout
Not all of the payment may come as cash at closing. Some deals include an “earnout,” where you receive additional payments for hitting future performance targets. Others might involve “rollover equity,” where you retain a minority stake in the new, larger company. This allows you to benefit from the future growth you help create.
Frequently Asked Questions
What is the current market outlook for selling an Occupational & Hand Therapy practice in San Francisco?
The market is strong and expanding, both nationally and locally. Nationally, the Occupational and Physical Therapy market is projected to grow by 10.1% annually through 2032. In San Francisco, the demand for therapy services is high, driven by a robust local talent pool and innovation. However, the market is competitive, so a practice must demonstrate profitability and a strong community position to attract premium offers.
What legal considerations should I be aware of before selling my Occupational Therapy practice in San Francisco?
In California, your practice likely needs to be structured as a California Professional Corporation (PC). If your practice is currently an LLC or another entity type, you’ll need to address this before the sale. This is a common hurdle that can cause delays if not handled well in advance.
How should I prepare financially for selling my practice?
Financial preparation involves having clean, accurate, and understandable financial statements for the last three years, including profit & loss statements and balance sheets. Buyers will scrutinize these to assess your practice’s profitability and health, so clarity and transparency are critical.
Who are the typical buyers for Occupational & Hand Therapy practices in San Francisco, and what are their goals?
There are two main buyer types: Strategic Buyers and Financial Buyers. Strategic Buyers are often other therapy providers seeking to expand geographically or add services and may integrate your practice into their brand. Financial Buyers, like Private Equity groups, look for profitable platforms with growth potential and focus on financial metrics like EBITDA. Your choice depends on whether you want a clean exit or ongoing involvement.
What happens after I sell my Occupational & Hand Therapy practice?
Post-sale is a transition phase that involves you, your team, and your patients. You may negotiate to stay on for a transition period, and the deal structure could include upfront payments, earnouts based on performance, or rollover equity for ongoing ownership stakes. Protecting your staff and patient care continuity is key to preserving your practice’s legacy.
