Guide to Selling a Occupational Therapy Practice in New Mexico

Selling your Occupational Therapy practice is one of the most significant financial and personal decisions you will make. For owners in New Mexico, the path to a successful exit involves understanding national demand, local market dynamics, and a unique state regulatory landscape. This guide provides the initial insights you need to navigate the process, protect your legacy, and achieve your financial goals. A well planned strategy is the key to maximizing your final outcome.

Market Overview

The demand for occupational therapy is strong. National projections show the need for OTs growing significantly, which creates a favorable backdrop for sellers. This long term demand suggests that well-run practices are valuable assets. However, the market in New Mexico has its own unique character.

The New Mexico Landscape

While national trends are positive, the local market for practice sales may be less active than in larger states. This does not mean there are no buyers. It means finding the right buyer1 who sees the unique value in your patient base, staff, and community reputation1requires a more targeted approach.

Regulatory Influence

Furthermore, New Mexico’s Health Care Consolidation Oversight Act gives the state the authority to review healthcare transactions. This adds a layer of oversight that owners must be prepared for, making a well structured and compliant sale process important for success.

Key Considerations

When you begin to consider a sale, your focus should shift to a few critical areas specific to operating in New Mexico. Addressing these points early on will make the entire process smoother and more predictable.

1. State-Specific Sale Laws
   New Mexico has clear rules for healthcare practice sales. This includes the N.M. Admin. Code (A7 16.12.10.9), which outlines specific requirements for notifying patients about the transfer of their care. Failing to follow these rules can create complications during and after the sale.

2. Licensing and Compliance
   A potential buyer will perform diligence on your practice’s compliance. They will verify that all OT licenses, regulated by the New Mexico Board of Occupational Therapy, are current and in good standing. Clean records give buyers confidence and can help maintain momentum during negotiations.

3. The Corporate Practice of Medicine
   You should also be aware of how the state’s view on the Corporate Practice of Medicine could influence the types of buyers who are eligible to purchase your practice. This can affect how a deal is structured, especially with non-therapist buyers like private equity groups or hospital systems.

Market Activity

You might wonder what is actually happening in the market for practices like yours. While individual OT practice sales are often confidential, we can look at public listings for similar businesses, like combined physical and occupational therapy clinics. Listings on platforms like BizBuySell show that established New Mexico clinics generating over $500,000 in revenue attract significant buyer interest.

This tells us that buyers are actively looking for profitable, well-run therapy practices in the state. The challenge is not just finding a buyer, but creating a competitive environment to secure the best terms. A passive “for sale” sign is not enough. The key is running a confidential, structured process that presents your practice to a curated pool of qualified buyers, including strategic partners and private equity groups looking to enter the New Mexico market.

The Sale Process

Selling a practice is not a single event. It is a multi-stage process that requires careful management to protect confidentiality and value. Each step builds on the last, and a misstep in an early phase can cause problems later.

1. Preparation and Planning
   This is where we see owners create the most value. It involves organizing your financial statements, understanding your key performance metrics, and preparing a compelling story about your practice’s growth potential. This is also the time to address any operational or compliance issues.

2. Valuation and Marketing
   With a clear picture of your practice’s health, a formal valuation is performed. Afterward, a confidential marketing process begins. Your advisor markets the opportunity to a vetted list of potential buyers without revealing your practice’s identity.

3. Negotiation and Due Diligence
   After receiving initial offers, you select the best potential partner and enter a more formal negotiation. The buyer will then conduct due diligence, a deep review of your financial, legal, and operational records. This is where many deals stall if the practice is not properly prepared.

4. Closing the Transaction
   Once due diligence is complete and the final legal documents are signed, the transaction officially closes. A transition plan is then executed to ensure a smooth handover to the new owner.

Understanding Your Practice’s Value

Many owners mistakenly believe their practice’s value is a simple multiple of its annual revenue. While revenue is a factor, sophisticated buyers focus on a more telling metric: Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents the true cash flow and profitability of your practice.

An experienced M&A advisor calculates Adjusted EBITDA by “normalizing” your financials. They adjust for owner-specific perks and one time expenses to present a clear picture of profitability. This disciplined approach, similar to what private equity firms use, ensures you are not leaving money on the table. For example, we often find that properly framing a practice’s financial story can significantly increase its perceived value to sophisticated buyers.

Post-Sale Considerations

The final signature on the sale agreement is not the end of the journey. A successful transition requires a clear plan for what comes next, both for you and for the practice you built. Thinking about these elements beforehand is part of a smart exit strategy.

1. Your Transition Role
   Buyers will want to know how you will be involved after the sale. Will you stay on for a few months to ensure a smooth patient and staff transition? Defining this role is a key part of the negotiation and protects the continuity of care your patients expect.

2. Protecting Your Legacy
   You have invested years into building your practice’s reputation and culture. The right deal structure can include provisions to protect your staff and ensure the practice’s mission continues under new ownership. This is often as important to sellers as the final price.

3. Managing Your Proceeds
   The structure of your sale has major tax implications. Whether it is an asset sale or an entity sale will impact your net proceeds. Planning this with an advisor from the start helps you structure a deal that optimizes your after-tax return, securing your financial future.

Every practice sale has unique considerations that require personalized guidance.