The Denver market for pediatric physical therapy is strong, presenting a significant opportunity for practice owners considering a sale. This is not just about finding a buyer. It is about strategic planning to maximize your practice’s value and secure your legacy. This guide covers the key market trends, valuation principles, and process steps you need to understand for a successful transition. Your specific goals should drive your strategy.
Market Overview
If you own a pediatric physical therapy practice, you are in a high-demand specialty. The global market is projected to grow at an impressive 9.5% annually through 2033. This trend is reflected locally. Employment for physical therapists is set to expand by 14% over the next decade, much faster than average.
For practice owners in a vibrant city like Denver, these numbers signal a clear opportunity. The combination of a growing population and a recognized need for specialized pediatric care makes your practice an attractive asset for buyers. These buyers range from larger healthcare platforms to private equity groups looking to enter the strong rehabilitation market. Navigating this demand correctly is the key to a premium outcome. This market is active. Understanding your position within it is the first step.
Key Considerations for Denver Practice Owners
Selling your practice goes beyond the numbers. You have built a trusted community resource, and your exit strategy should reflect that. Before you begin the process, we find it helps to think through a few key areas.
Finding the Right Partner, Not Just a Buyer
Is your ideal successor a large therapy network, a private equity firm, or another local practitioner? Each brings different resources, goals, and cultures. A strategic partner might offer growth opportunities, while a local owner might preserve the intimate feel you have cultivated. Defining your ideal outcome first helps narrow the search to only the right-fit buyers.
Protecting Your Legacy and Your Team
Your staff and the families you serve are the heart of your practice. A successful transition ensures their security. This often involves negotiating employment agreements for key therapists and communicating a clear plan for continuity of care. The right deal structure protects the team that helped you build the practice.
Understanding Your Niche Value
A pediatric physical therapy practice is not a general clinic. Your referral networks, specialized equipment, and long-term patient relationships create a defensible market position. Articulating this unique value is critical during negotiations and has a direct impact on your final valuation.
Market Activity: A Seller’s Market in Colorado
The M&A market for physical therapy in Colorado is not just theoretical. It is active and vibrant. National players are making significant investments here, signaling confidence in our state’s economic and healthcare landscape.
For instance, U.S. Physical Therapy, Inc. (USPH), a major national operator, recently acquired a 70% stake in a Colorado-based practice. Similarly, groups like PHOENIX Rehabilitation and ATI Physical Therapy have also been acquiring local clinics to expand their footprint.
What does this mean for you? It means there is a competitive landscape of qualified buyers looking for well-run practices. When multiple buyers compete for a single practice, it drives up value and gives you, the owner, more leverage in negotiations. This activity confirms that Denver is a sought-after location. Knowing how your practice compares to those recently sold is a powerful advantage.
The 4 Steps of a Successful Practice Sale
A practice sale is a structured project, not a single event. When managed correctly, the process unfolds in a predictable way. We see it as a four-step journey.
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Preparation and Valuation. This is the foundation. It involves organizing your financial statements, optimizing your profitability (or what we call Adjusted EBITDA), and establishing a clear, defensible valuation. Starting this 12 to 24 months before a sale can dramatically increase the final price.
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Confidential Marketing. Your practice is confidentially presented to a curated list of qualified buyers who have been vetted to match your goals. This is a delicate process. It is designed to create competitive tension while protecting your privacy and preventing disruption to your staff and patients.
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Negotiation and Due Diligence. After initial offers are received, you select a preferred partner and sign a Letter of Intent (LOI). This kicks off due diligence, where the buyer verifies all financial and operational details of your practice. This stage is intense and is where many deals encounter problems without proper preparation.
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Closing and Transition. Once due diligence is complete, final legal documents are drafted and signed. The transaction is funded, and you begin the transition to new ownership, following the plan you established during negotiations.
How is a Pediatric PT Practice Valued?
Many owners believe their practice is worth a simple percentage of its annual revenue. Sophisticated buyers, however, use a more precise formula: Adjusted EBITDA x a Market Multiple.
First, we determine your true cash flow, or Adjusted EBITDA. This starts with your net profit and adds back interest, taxes, depreciation, and amortization. Then, we normalize for any owner-related expenses that a new owner would not incur, like an above-market salary or personal vehicle expenses. This gives the true profitability of the practice.
Next, a multiple is applied to that number. This multiple is not fixed. It changes based on several factors.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Provider Model | Owner-dependent | Associate-driven |
| Size/Scale | Under $500k EBITDA | Over $1M EBITDA |
| Growth | Flat revenue | Consistent growth |
| Referral Sources | Concentrated (1-2 sources) | Diverse and stable |
Getting this right is the foundation of a successful sale. It is a mix of financial analysis and telling a compelling story about your practice’s future.
Planning Your Life After the Sale
The transaction is not the end of the story. Your transition out of ownership requires as much thought as the sale itself. Your personal, financial, and professional goals for the next chapter of your life will shape the structure of your deal today.
Your Continued Involvement
Do you want to continue practicing clinically for a few years, or are you ready for a clean exit? Your desired role will influence the type of buyer you choose and the terms of your post-sale employment agreement. Some buyers will want you to stay on to ensure a smooth transition, while others can operate without you.
Structuring Your Payout
Many owners are surprised that the final price is not always 100% cash at closing. Modern deals often include two key components. An earnout provides future payments if the practice hits certain performance targets. An equity rollover allows you to retain a stake (often 10-30%) in the new, larger company. This provides a potential “second bite of the apple” when that larger company sells again in the future.
Optimizing Your Financial Outcome
Finally, the way a sale is structured has massive tax implications. Planning ahead with a professional can ensure more of the proceeds end up in your pocket. This involves looking at the deal through a tax lens from the very first conversation.
Frequently Asked Questions
What makes the Denver market attractive for selling a Pediatric Physical Therapy practice?
Denver’s Pediatric Physical Therapy market is strong due to high demand fueled by a growing population and specialized pediatric care needs. Employment for physical therapists in the area is projected to grow 14% over the next decade, making practices attractive to buyers including large healthcare networks and private equity firms.
How is the value of a Pediatric Physical Therapy practice in Denver determined?
The practice value is based on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) multiplied by a market multiple. This calculation considers true cash flow by normalizing owner-related expenses and applies a multiple influenced by factors like provider model, size, growth, and diversity of referral sources.
What should sellers consider when choosing a buyer for their Pediatric Physical Therapy practice?
Sellers should think beyond just finding any buyer to finding the right strategic partner. This might be a large therapy network, a private equity firm, or a local practitioner. The ideal partner will align with the seller’s goals for legacy, growth opportunities, and preservation of the practice culture.
What are the key steps in the selling process of a Pediatric Physical Therapy practice in Denver?
The process typically involves four steps: (1) Preparation and Valuation – organizing financials and establishing value, (2) Confidential Marketing – presenting the practice to vetted buyers, (3) Negotiation and Due Diligence – selecting a partner and verifying details, and (4) Closing and Transition – finalizing legal documents and ownership transfer.
What happens after selling a Pediatric Physical Therapy practice in terms of seller involvement and payout?
Post-sale involvement varies — sellers may continue practicing or exit entirely. Payouts often include both cash at closing and future earnouts based on performance targets, possibly coupled with equity rollover allowing the seller to retain a stake in the new company. Structuring the sale with tax implications in mind can optimize financial outcomes.