Selling your Orthopedic and Post-Surgical Rehab practice is one of the most important financial decisions you will ever make. In Texas, the current market is creating significant opportunities for owners, driven by high patient demand and strong buyer interest. This guide provides a clear overview of the market, key considerations for a successful sale, and how to navigate the process to protect your legacy and maximize your outcome.
Curious about what your practice might be worth in today’s market?
Market Overview: A Seller’s Market in the Lone Star State
The environment for selling an orthopedic rehab practice in Texas is exceptionally strong. This isn’t just a feeling. It’s a trend supported by clear economic and demographic tailwinds. For practice owners, this creates a window of opportunity. Understanding these forces is the first step toward leveraging them for a successful sale.
Three key factors are driving this favorable market:
- Surging Demand for Care. A remarkable 29.9% increase in orthopedic surgeries nationwide between early 2022 and mid-2023 has created a powerful, built-in demand for high-quality post-surgical rehabilitation services like yours. More surgeries directly translate to more patients needing your expertise.
- A Growing Texas Population. Texas is a hub of growth. The states demand for physical therapists is projected to grow 28% by 2030, far outpacing the national average. This robust local market makes Texas-based practices particularly attractive to buyers looking for stable, long-term growth.
- Strong Buyer Appetite. Your practice is a valuable asset, and sophisticated buyers know it. Both private equity (PE) firms and large healthcare systems are actively looking to acquire or partner with successful orthopedic rehab practices to build their presence in the thriving Texas market.
Key Considerations for a Successful Sale
An active market means buyers are looking, but it also means they are looking closely. When a potential buyer evaluates your practice, they are looking beyond the surface. They want to understand the health and stability of the business. Before you go to market, you should be prepared to answer their key questions with clear, well-organized information. They will want to see consistent financial records, including profit & loss statements, to verify profitability. They will also assess your operational efficiency, the stability of your staff, and the sources of your patient referrals. Preparing this information in advance shows professionalism and positions your practice as a well-managed, low-risk acquisition.
Market Activity: Who Is Buying and Why?
Todays buyers are not a uniform group. They generally fall into two categories, each with different goals and deal structures. Understanding this landscape is key to finding a partner who aligns with your personal and financial objectives. For many owners we speak with, the fear of losing control is a major concern. The good news is that control isn’t an all-or-nothing proposition. The right deal structure can preserve your clinical autonomy and legacy.
Here is a simple breakdown of the most common buyer types:
| Feature | Private Equity & MSOs | Strategic Health Systems |
|---|---|---|
| Primary Goal | Growth and profitability through scale. | Patient care continuity and service line integration. |
| Typical Deal Structure | Often includes cash at close plus equity rollover. | Typically a full cash acquisition. |
| Your Role Post-Sale | Varies from continued leadership to a planned exit. | Usually transitions to an employment model. |
Finding the right type of buyer for your practice depends on your specific goals.
The Sale Process: More Than a Single Event
Selling your practice is a structured process, not a one-time event. Thinking about it in phases can make it more manageable. The journey typically begins with comprehensive preparation and a formal valuation. This is followed by confidentially marketing the practice to a curated list of qualified buyers, hosting management meetings, and negotiating offers. The final stage is due diligence, where the buyer verifies all the information you
provided. This is the period where many deals encounter unexpected challenges. Proper preparation, with every document in order and every question anticipated, is the best way to ensure a smooth path to a successful closing.
Valuation: What Is Your Practice Really Worth?
One of the first questions any owner asks is, “What’s my practice worth?” The answer is more complex than a simple multiple of your yearly revenue. Sophisticated buyers base their valuation on a metric called Adjusted EBITDA, which provides the truest picture of your practice’s profitability.
It Starts with Adjusted EBITDA, Not Just Profit
Your standard profit and loss statement doesn’t tell the whole story. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) normalizes your financials by adding back owner-specific expenses like a vehicle lease or a higher-than-market salary. This process reveals the practice’s true cash flow, which is what a buyer is purchasing. We find that many practices are undervalued until their EBITDA is properly calculated.
The Power of the Multiple
Once your Adjusted EBITDA is established, a multiple is applied to determine the enterprise value. This multiple isn’t arbitrary. It’s influenced by several factors:
* Scale: Practices with higher EBITDA often command higher multiples.
* Staff Stability: A practice with a strong team of therapists that doesn’t rely solely on the owner is less risky and more valuable.
* Growth Profile: A clear path to future growth, whether through adding services or locations, will increase your multiple.
A professional valuation tells a compelling story backed by defensible numbers, ensuring you don’t leave money on the table.
A comprehensive valuation is the foundation of a successful practice transition strategy.
Post-Sale Considerations: Planning for Your Next Chapter
The work isnt over once you agree on a price. A successful transition requires careful planning for what comes next, both for the practice and for you personally. This includes creating a detailed transition plan to ensure continuity of care for patients and stability for your staff, which is a key concern for any quality buyer. Equally important is the structure of the sale itself. How your deal is structured has major implications for your after-tax proceeds. Planning this in advance can significantly impact your net outcome. Whether you plan to retire or stay involved in a new capacity, thinking through these post-sale elements is critical to protecting your financial future and the legacy you
built.
Every practice sale has unique considerations that require personalized guidance.
Frequently Asked Questions
What makes Texas a favorable market to sell my Orthopedic & Post-Surgical Rehab practice?
Texas offers a strong seller’s market due to several factors: a significant 29.9% increase in orthopedic surgeries nationwide which drives demand for rehab services, a growing local population with an expected 28% increase in demand for physical therapists by 2030, and strong buyer interest from private equity firms and health systems looking to expand in Texas.
What key financial documents should I prepare before selling my practice?
Potential buyers will expect consistent and clear financial records, including detailed profit & loss statements to verify profitability. You should also prepare to demonstrate operational efficiency, staff stability, and sources of patient referrals to position your practice as a well-managed and low-risk acquisition.
How is the value of my practice determined?
The value is primarily based on Adjusted EBITDA, which reflects the practice’s true cash flow by normalizing expenses such as owner-specific costs. A multiple is then applied to this EBITDA, influenced by factors like practice scale, staff stability, and growth potential, to determine the enterprise value.
What are the common types of buyers and how do their deal structures differ?
Buyers typically fall into two types: Private Equity & MSOs, who seek growth and profitability through scale and often offer cash plus equity rollover; and Strategic Health Systems, who focus on patient care continuity and usually offer full cash acquisitions. Your post-sale role varies accordingly, with PE buyers possibly allowing continued leadership, while health systems often transition sellers to an employment model.
What should I plan for after selling my practice?
Post-sale planning is crucial and includes creating a detailed transition plan for patient care continuity and staff stability. The structure of the sale also impacts your after-tax proceeds, so considering your retirement plans or continued involvement ahead of time helps protect your financial future and the legacy of your practice.