Guide to Selling a Physical Therapy Practice in North Carolina

The market for physical therapy practices in North Carolina is active. An aging population and a growing focus on non-surgical treatments are fueling high demand for services, making well-run practices attractive to buyers. Whether you are a few years away from retirement or simply exploring your options, understanding the current landscape is the first step toward a successful transition. This guide will walk you through the key dynamics, from valuation to post-sale life, to help you prepare.

Market Overview: A Time of Opportunity and Consolidation

If you own a physical therapy practice in North Carolina, you are likely aware of the shifting landscape. It is not just your imagination. The market is undergoing significant change, which presents both opportunities and strategic questions for independent owners like you.

The Consolidation Wave

The PT market has historically been fragmented, with many small, independent practices. That is changing. We see a clear trend of larger therapy companies and private equity groups acquiring successful local practices to build regional and national platforms. This means more buyers are in the market, actively looking for great practices to join their networks. While this creates a competitive environment that can increase your practice’s value, it also means the buyers are sophisticated.

Strong Demographic Tailwinds

North Carolina’s growing and aging population provides a strong, long-term foundation for the physical therapy industry. This predictable demand for services is exactly what investors look for. It reduces their risk and gives them confidence in the future revenue of the practices they acquire. Your practice benefits directly from this demographic tailwind, making it a valuable asset in today’s market.

Key Considerations Before You Sell

An active market is good news, but a successful sale depends on preparation. Buyers pay for proven performance and potential, not just promises. Here are three areas to focus on as you begin to think about your transition.

1. Your Financial Story. Buyers are most interested in your practice’s profitability. The key metric they use is Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This number reflects the true cash flow of your business, separate from owner-specific expenses. Having clean, clear financial statements that demonstrate consistent profitability is the single most important factor in your valuation.

2. Your Operational House. A well-run practice is a valuable practice. This means having documented procedures for everything from hiring to billing. A strong, experienced staff that can operate without you is also a massive asset. Buyers will perform thorough due diligence, and organized records and a great team give them confidence in the business they are acquiring.

3. North Carolina’s Unique Rules. Unlike some medical professions, physical therapy in North Carolina is not governed by the Professional Corporation Act. This simplifies things. You do not need a special certificate to operate and have more flexibility in your business structure. Understanding these nuances is important, but the primary focus for a buyer will remain on your practice’s financial health and operational strength.

What We’re Seeing in the North Carolina Market

The theory of market consolidation becomes very real when you look at recent activity. For instance, the recent sale of OrthoCarolina’s 24 physical therapy locations to PT Solutions, a private equity-backed group, is a major signal. It shows that large, well-capitalized buyers are actively acquiring practices in our state.

This activity is not just for huge groups. It creates a domino effect that benefits independent owners. Here is how the key market drivers impact your potential sale.

This environment suggests that timing can be critical. Selling when buyer interest is high, like it is now, can significantly impact your final outcome.

A Simplified Look at the Sale Process

Selling your practice can seem like a complex journey, but it follows a logical path. When we work with owners, we manage this process from start to finish. Here is a simplified look at the typical stages.

1. Preparation and Valuation. This is the foundational work. We help you gather your financial and operational documents and perform a detailed valuation to determine what your practice is worth in the current market. This sets a realistic and defensible price expectation.

2. Confidential Marketing. Your practice is taken to market without revealing its identity. We approach a curated list of qualified strategic and financial buyers, sharing just enough information to gauge interest. This protects your confidentiality with staff and patients while creating competitive tension among potential buyers.

3. Navigating Due Diligence. Once a serious buyer is identified and an initial offer is accepted, the due diligence phase begins. This is an intense review of every aspect of your business, from billing codes and employee contracts to financial statements. Being well-prepared here is the key to a smooth process. It is the stage where many deals fall apart if a practice is not ready.

4. Finalizing the Deal. The final stage involves negotiating the definitive legal documents, like the purchase agreement and employment terms. Once everything is signed, the transaction officially closes, and the transition to new ownership begins.

How Your Practice Is Valued

Understanding your practice’s value is more than just a number. It is about understanding the story your business tells a buyer. While many factors are involved, the formula boils down to two key components.

It Starts with Adjusted EBITDA

As we mentioned, the most important metric is your Adjusted EBITDA. Think of this as your practice’s true annual profit. We calculate this by taking your net income and adding back interest, taxes, depreciation, and amortization. Then, we “normalize” it by adjusting for any one-time or owner-specific expenses, like a car lease run through the business or an above-market owner salary. This process often reveals that a practice is significantly more profitable than it appears on paper.

Finding the Right Multiple

Once we have a clear Adjusted EBITDA, that number is multiplied by a figure called a “multiple” to get your total practice value. This multiple is not a fixed number. It varies based on risk and opportunity.

• Practices with under $500K in EBITDA might see multiples in the 3.0x to 5.0x range.
• Practices with over $1M in EBITDA are seen as less risky and can command higher multiples, often from 5.5x to 7.5x or more.

Factors like having a strong management team, diverse referral sources, and clear growth potential can all push your multiple higher. An expert valuation tells the right story to justify the highest possible multiple.

Planning for Life After the Sale

The closing of the sale is not the end of the story. It is the beginning of a new chapter. How that chapter reads depends on the terms negotiated in the deal. Thinking through these elements beforehand is critical to ensuring the transition aligns with your personal and financial goals.

1. Your New Role. Most buyers will want you to stay on for a period of time to ensure a smooth transition. The terms of this are defined in an employment agreement. Will you be a clinical director or a treating therapist? What are the expectations? This is a key part of the negotiation.

2. The Covenant Not to Compete. You will be asked to sign a non-compete agreement, which prevents you from opening a competing practice nearby for a set period, typically around five years. Understanding the geographic and time limits of this covenant is important for your future plans.

3. Your Payout Structure. Your payment may not be 100% cash at closing. It is common for 5-10% of the price to be held in escrow for 1-3 years to cover any unforeseen liabilities. Some deals also include an “earnout,” where you receive additional payments if the practice hits certain performance targets after the sale. We help you structure these elements to protect your interests and maximize your total proceeds.