Selling your Houston-based Occupational Therapy practice is a significant decision. The current market presents unique opportunities, but maximizing your practice’s value requires a clear understanding of the process, correct timing, and strategic preparation. This guide provides a direct look at the Houston OT market, key steps for a successful sale, and what to consider for your legacy and financial future. We will help you navigate the path from consideration to a successful closing.
Houston’s Growing Market for Occupational Therapy
The healthcare landscape in Houston is active. This creates a favorable environment for Occupational Therapy practice owners who are considering a sale. The demand for your services is fueled by several strong local trends.
A Diverse Patient Base
Houston’s continuous population growth, which includes young families and a large retiring demographic, creates sustained demand for both pediatric and geriatric OT services. This built-in patient base is a significant point of value for potential buyers looking for stable, long-term growth.
A Hub for Healthcare
As home to the Texas Medical Center, Houston attracts a wide range of sophisticated buyers. These include large hospital systems, expanding multi-state therapy groups, and private equity investors looking for strong local platforms. These buyers are knowledgeable and seek well-run practices to add to their networks. This activity means you have options, but it also means buyers expect a high level of professionalism.
Three Key Considerations Before You Sell
Before you even think about a valuation, your focus should be on making your practice as attractive as possible. In our experience helping owners, a few areas consistently make the biggest impact on the final sale price and the smoothness of the transaction.
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Owner Dependence. A practice that relies entirely on you for patient relationships and revenue is harder to sell. Buyers look for systems, documented processes, and a strong team that can ensure continuity after you transition out. A practice driven by associate providers will command a higher value.
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Revenue Streams. Is your revenue entirely from in-network insurance? While stable, buyers get excited by diversified income. The research suggests exploring secondary streams like cash-pay wellness programs, corporate ergonomic consulting, or specialized group sessions. This shows growth potential beyond the current model.
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Confidentiality. A premature announcement can disrupt your practice. Employees may worry about their jobs, and referring physicians or clients might become hesitant. A sale must be kept confidential until the right moment. This requires a careful strategy for communicating with potential buyers without alerting your market.
Understanding the Buyer Landscape
The type of buyer you attract will shape the entire deal, from valuation to your role after the sale. In Houston, we are seeing activity from a few key groups, each with different goals.
Strategic Buyers
These are typically other OT practices or larger multidisciplinary therapy companies. Their goal is often to expand their geographic footprint in the Houston area or add a specialty service they lack. They understand the clinical side of the business very well and will focus on your referral sources and operational efficiency.
Financial Buyers
This category includes private equity (PE) groups and other investors. They see occupational therapy as a stable and growing healthcare sector. A financial buyer is focused on the numbers: specifically, your practice’s profitability (EBITDA) and potential for growth. They often look for practices that can serve as a “platform” to acquire other, smaller practices in the region. Selling to a PE group can sometimes offer you the chance to retain some ownership and benefit from future growth.
The Four Stages of the Sale Process
Selling a practice is not a single event. It is a structured process with distinct phases. Understanding this roadmap helps you prepare and manage your expectations. Missing a step or rushing through a phase is where we see most deals run into trouble.
| Stage | Purpose | Common Pitfall |
|---|---|---|
| 1. Preparation | Getting your financial and operational house in order. This includes cleaning up books, organizing documents, and getting a professional valuation. | Going to market with messy financials that create doubt and lower the initial offer. |
| 2. Marketing | Confidentially presenting your practice to a curated list of qualified buyers without alerting the public, your staff, or your competitors. | Speaking to only one or two potential buyers, which prevents competitive tension and leads to a lower price. |
| 3. Due Diligence | The buyer conducts a deep review of your financials, contracts, and operations. This is an intense period of scrutiny. | Being unprepared for detailed requests, which can kill the deal’s momentum or uncover surprises that reduce the valuation. |
| 4. Closing | Finalizing legal documents, like the asset purchase agreement, and managing the transfer of ownership, funds, and assets. | Overlooking key details in the final contract that have major tax or liability implications down the road. |
How Your Practice is Valued
Practice owners often ask us, “What is my practice worth?” The answer is more complex than a simple rule of thumb. Sophisticated buyers do not value your practice based on revenue. They value it based on its profitability and future cash flow.
Looking Beyond Net Income
The key metric is called Adjusted EBITDA. This stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. Think of it as the true cash profit of the business. We calculate it by taking your net income and adding back owner-specific expenses (like a personal vehicle run through the business) and normalizing your salary to a fair market rate. A practice with $1M in revenue and $300k in Adjusted EBITDA is far more valuable than a practice with $1.5M in revenue but only $200k in Adjusted EBITDA.
The final valuation is typically this Adjusted EBITDA figure multiplied by a number called a “multiple.” For a healthy, multi-provider OT practice, this multiple might be in the 5x to 7x range, but it can be higher for practices with exceptional growth, scale, and systems. Getting this calculation right is the foundation of a successful sale.
Planning for Life After the Sale
The transaction is not the end of the story. The best deals are structured to protect your legacy and set you up for your next chapter. Thinking about these things early in the process is critical. A good advisory team helps you negotiate terms that align with your personal and financial goals.
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Your Team’s Future. You have likely spent years building a dedicated team. The purchase agreement can and should include provisions for protecting your key staff, ensuring a smooth transition for them as well as your patients.
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Your Ongoing Role. Do you want to walk away completely, or would you prefer to stay on for a year or two, perhaps in a reduced clinical or leadership role? This is a key point of negotiation that defines your transition into retirement or your next venture.
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The Financial Structure. Not all of the payment may be cash at closing. Buyers may propose an “earnout,” where a portion of the price is paid out later if the practice hits certain performance targets. Another common structure is “rollover equity,” where you retain a minority stake in the new, larger company. This can provide a significant second payday when the larger entity sells in the future.
Your exit strategy should be as carefully planned as your business strategy.
Frequently Asked Questions
What makes Houston a good market for selling an Occupational Therapy practice?
Houston’s healthcare landscape is vibrant, driven by population growth including young families and retirees, creating consistent demand for pediatric and geriatric OT services. Additionally, Houston is home to the Texas Medical Center, attracting sophisticated buyers like hospital systems and private equity investors.
What key factors should I focus on to maximize the sale value of my OT practice?
Focus on reducing owner dependence by building a strong, independent team, diversifying your revenue streams beyond just in-network insurance to include cash-pay programs or consulting, and maintaining confidentiality about the sale to avoid disruption among staff and clients.
Who are the typical buyers for Occupational Therapy practices in Houston?
Typical buyers include strategic buyers like other OT or multidisciplinary therapy companies looking to expand their footprint or services, and financial buyers such as private equity groups that value practices based on profitability and growth potential and may offer opportunities for continued ownership.
What are the main stages of selling an Occupational Therapy practice and common pitfalls to avoid?
The four stages are Preparation (organizing finances and getting valuation), Marketing (confidentially reaching multiple buyers), Due Diligence (being prepared for detailed reviews), and Closing (finalizing legal agreements). Avoid pitfalls like messy financials, low buyer competition, unpreparedness for scrutiny, and overlooking contract details.
How is the value of my Occupational Therapy practice determined?
Value is based primarily on Adjusted EBITDA, reflecting true cash profit after adjustments. The practice’s worth is the Adjusted EBITDA multiplied by a market multiple (typically 5x to 7x for healthy multi-provider practices). A focus on profitability and systems can increase this multiple.