Selling your Occupational Therapy practice is one of the most significant financial and professional decisions you will ever make. For practice owners in Denver, the current market presents a unique mix of high demand and specific local challenges. This guide provides a clear overview of the landscape, what drives value in a practice like yours, and the key steps to navigate a successful sale. We’ll outline what you need to know to move forward with confidence.
Market Overview
The environment for selling an OT practice in Denver is strong, shaped by both national tailwinds and local dynamics. Demand for therapy services is rising, but owners must also understand the specific factors at play in the Colorado market to position their practice for a premium valuation.
A Growing Need in the Mile High City
Nationally, the demand for occupational therapists is projected to grow 14% through 2031. This trend is amplified in growing metropolitan areas like Denver. This underlying demand makes established, well-run OT practices attractive targets for buyers looking to enter or expand in the region. Buyers are not just looking for a business; they are looking for a foothold in a thriving healthcare community.
Navigating Local Headwinds
While demand is high, Denver practice owners face real challenges. You have likely felt the pressure of rising operating costs. Furthermore, complexities around payer mix, including Colorado’s specific Medicaid rates and ongoing changes to insurance reimbursement, can directly impact a practice’s profitability. A potential buyer will look closely at how your practice has managed these issues, making a clear financial story more important than ever.
Key Considerations
When preparing to sell, your focus should shift from day-to-day operations to how a buyer perceives your practice’s value and risk. It’s about more than just a revenue number. A potential acquirer will analyze your business to understand its true earning power and future potential. They will look past the surface to evaluate factors like your reliance on any single therapist (including yourself), the stability of your referral sources, and the efficiency of your billing and collections processes. Many owners are surprised to learn that their practice is worth more than they think once these elements are properly presented. Framing this story correctly is a critical step in maximizing your final sale price.
Market Activity
The national market for physical and occupational therapy, a $53 billion industry, is active. This translates to significant opportunities for practice owners in Denver who are prepared to act. We see several key trends shaping deals in today’s environment:
- A Diverse Range of Buyers: Its not just other local practices looking to acquire. Sophisticated buyers, including regional therapy groups and private equity platforms, are actively seeking to invest in the Denver market. This creates a competitive environment for well-positioned practices.
- The Search for “Platform” Practices: Buyers are often looking for a strong, reputable practice to serve as their “platform” for future growth in Colorado. If your practice has a great reputation, multiple therapists, and solid systems, it could command a premium valuation as a strategic platform investment.
- A Premium on Professional Operations: In a competitive market, buyers gravitate toward practices with clean, transparent financials and well-documented operational procedures. This reduces their perceived risk and speeds up the due diligence process, often leading to better offers.
The Sale Process
Many owners believe selling a practice means finding one buyer and negotiating a price. A truly successful sale, however, is a structured process designed to protect your confidentiality and create a competitive dynamic that drives up value. The journey from decision to closing involves preparing your practice for scrutiny, confidentially identifying and approaching a curated list of qualified buyers, and managing negotiations to secure the best possible terms. Failing to prepare for the buyer’s due diligence is one of the most common pitfalls we see. Unexpected issues uncovered at this late stage can derail a deal or force a seller to accept a last-minute price reduction. A proactive, managed process anticipates these challenges and solves them upfront.
Valuation
One of the first questions any owner asks is, “What is my practice worth?” While online calculators might offer simple revenue multiples, a true valuation goes much deeper. Sophisticated buyers value your practice based on its Adjusted EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This figure represents the true cash flow of your business, adjusted for owner-specific expenses and one-time costs. Your final valuation is this number multiplied by a “multiple,” which is heavily influenced by factors that signal risk and opportunity to a buyer.
| Factor | Lower Valuation | Higher Valuation |
|---|---|---|
| Provider Model | High dependency on the owner | Associate-driven, low owner reliance |
| Financials | Inconsistent or messy records | Clean, “due diligence ready” financials |
| Payer Mix | Heavy Medicaid, low reimbursement | Diverse mix with strong commercial rates |
| Growth Profile | Stagnant patient volume | Clear path for new service or location growth |
Understanding how to calculate your Adjusted EBITDA and how these factors apply to your practice is the first step toward understanding its real market value.
Post-Sale Considerations
A successful transaction is about more than the check you receive at closing. It’s also about securing your legacy, ensuring a smooth transition for your staff, and structuring the deal to meet your personal and financial goals. Your role after the sale, the protection of your team, and the future of the brand you built are all negotiable points. These elements are often addressed through deal structures like an earnout, which provides future payments for hitting performance targets, or an equity rollover, where you retain a minority stake in the new, larger company. Planning for these outcomes from the beginning ensures the final agreement aligns with what is most important to you beyond just the final price.
Frequently Asked Questions
What is the current market demand for Occupational Therapy practices in Denver, CO?
The demand for occupational therapy services in Denver is strong and growing, with the national demand projected to increase by 14% through 2031. Denver’s expanding metropolitan area amplifies this demand, making established OT practices attractive to buyers seeking to enter or grow in the healthcare community in Colorado.
What local challenges should I be aware of when selling my OT practice in Denver?
Owners in Denver face rising operating costs and complexities around payer mix, including Colorado’s specific Medicaid rates and changes in insurance reimbursement. These factors affect profitability and are closely examined by potential buyers to assess financial stability and risk.
How do buyers determine the value of my Occupational Therapy practice?
Buyers typically value practices based on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which reflects the true cash flow adjusted for owner expenses and one-time costs. Factors influencing valuation include provider model dependency, financial record cleanliness, payer mix diversity, and growth potential of patient volume or services.
What should I focus on to maximize the sale price of my practice?
Focus on presenting a clear financial story, reducing reliance on any single therapist (including yourself), maintaining stable referral sources, and ensuring efficient billing and collections processes. Practices with clean, transparent financials and well-documented operations that reduce buyer risk tend to command premium offers.
What happens after I sell my Occupational Therapy practice in Denver?
After the sale, considerations include securing your legacy, ensuring a smooth transition for staff, and structuring the deal to meet personal and financial goals. Options like earnouts or equity rollovers can provide future payments or minority stakes. Planning these elements upfront helps align the deal with your priorities beyond just price.