Selling your ABA practice is a major decision. For owners of school and community-based practices in Memphis, the current market presents unique opportunities driven by national growth and strong investor interest. This guide provides a direct look at the Memphis market, what buyers are looking for, and how to navigate the sale process. Making the right moves now requires understanding your practice’s true market position, and this article will walk you through the key factors.
Market Overview
The timing for considering a sale of your ABA practice is strong. Nationally, the applied behavior analysis market is expected to grow by nearly 5% annually through 2032. This growth has attracted significant attention from investors. In Memphis, this national trend is supported by a solid local ecosystem, which includes a variety of service models and the University of Memphis’s Autism Treatment, Training and Research Clinic. This creates a competitive environment where well-run practices are viewed as valuable assets, particularly by the private equity firms driving much of the M&A activity. Your practice is not just a local service. It is a part of a dynamic national market.
Key Considerations
When a potential buyer looks at your Memphis practice, they focus on specific areas to assess risk and value. Getting these right before you start the process is critical. Here are three things they will analyze closely.
- State Licensing and Compliance. Buyers will perform deep diligence on your adherence to Tennessee’s rules. They will verify that all your behavior analysts are properly licensed through the state’s Applied Behavior Analyst Licensing Committee. Any gaps in compliance can become significant problems during a sale.
- Staff Stability and Quality. The strength of your team of BCBAs and RBTs is a major value driver. Buyers look for low turnover and a well-qualified team. Given the competitive market for talent in Tennessee, demonstrating that your key staff are secure and likely to stay through a transition is a huge plus.
- Referral and Payer Contracts. A diverse and stable set of referral sources, including school districts, pediatricians, and insurance providers, shows a healthy business. Buyers will review your contracts to understand revenue predictability. Reliance on a single school system or insurance plan is a risk they will price into their offer.
Market Activity
The current M&A market for ABA practices is not just active. It is being defined by a specific type of buyer. Recent reports confirm that behavioral health is a hot sector for acquisitions in 2024. The overwhelming majority of these deals, close to 90%, are being done by private equity firms. This means your most likely buyer is a sophisticated financial investor, not another local clinician. They have a specific playbook for growth and are looking for well-organized practices to serve as platforms or strategic add-ons. Understanding their goals and process is key to positioning your practice for the best outcome.
The Sale Process
Selling a practice isnt a single event. It is a structured process with distinct phases. Understanding this roadmap helps you prepare for what is ahead. Many deals fall apart not because of a lack of interest, but because of poor management of the process itself, especially during the final stages.
| Stage | What It Means | Why It Matters |
|---|---|---|
| 1. Preparation | We work with you to clean up financial records, organize contracts, and develop a compelling story about your practice’s growth potential. | This is where you create value. A well-prepared practice can command a higher valuation and moves through the process more smoothly. |
| 2. Marketing | Your practice is confidentially presented to a curated list of qualified buyers. We create competitive tension to drive interest and generate strong initial offers. | Running a competitive process ensures you see the full range of what the market will pay. Accepting the first offer is rarely the best deal. |
| 3. Due Diligence | The chosen buyer conducts a deep, formal review of your finances, operations, and legal compliance before finalizing the deal. | This is the most intensive phase. Proper preparation in Stage 1 prevents surprises here that could lower your price or kill the transaction. |
Valuation
Many practice owners wonder what their business is truly worth. It is not based on revenue or a simple rule of thumb. Sophisticated buyers value your practice based on a metric called Adjusted EBITDA. Think of this as your practice’s true, normalized annual cash flow after adding back owner-specific expenses like excess salary or personal car payments. This Adjusted EBITDA figure is then multiplied by a number, the “multiple,” to determine the enterprise value. For a multi-provider ABA practice, that multiple could be 6x, 7x, or even higher. The multiple depends on factors like your payer mix, provider team stability, and growth opportunities. Getting the Adjusted EBITDA calculation right is the most important first step. We often find that owners are leaving value on the table by not looking at their financials the way a buyer would.
Post-Sale Considerations
The transaction does not end when you sign the papers. The structure of your deal has long-term implications for your finances, your professional life, and your team. It is important to plan for this from the beginning.
Your Financial Future
Many deals are not 100% cash at closing. You may be offered an “earnout,” where you receive additional payments over the next few years if the practice hits certain performance targets. Another common structure is an “equity rollover,” where you retain a minority ownership stake in the new, larger company. This gives you a potential second financial win when the PE firm sells the platform in the future.
Your Professional Role
What do you want to do after the sale? Some owners want to retire immediately. Others want to continue practicing clinically without the headaches of management. Some want to take on a leadership role in the new organization. Your desired role will influence the type of buyer and deal structure that is right for you.
Protecting Your Team and Legacy
You have spent years building your practice and your team. Finding a buyer who respects that culture and is committed to taking care of your staff is a priority for many owners. The right partner will see your team as a key asset, not an expense to be cut. This is a key part of negotiating and ensures your legacy is protected.
Frequently Asked Questions
What is the current market outlook for selling a School & Community-Based ABA practice in Memphis, TN?
The market for selling ABA practices in Memphis is strong, supported by national growth trends with the applied behavior analysis market expected to grow nearly 5% annually through 2032. The local ecosystem, including support from the University of Memphis and various service models, makes well-run practices attractive to buyers, particularly private equity firms interested in M&A activity.
What are buyers in Memphis specifically looking for when assessing an ABA practice for sale?
Buyers focus on three key areas:
1. State Licensing and Compliance – verifying that all behavior analysts are properly licensed in Tennessee.
2. Staff Stability and Quality – a low turnover rate and a qualified team of BCBAs and RBTs.
3. Referral and Payer Contracts – a diverse and stable set of referral sources and contracts that ensure predictable revenue.
How is the value of a School & Community-Based ABA practice determined in Memphis?
Value is primarily based on the practice’s Adjusted EBITDA, which reflects true normalized annual cash flow after adjusting for owner-specific expenses. This figure is then multiplied by a multiple, generally between 6x and 7x for multi-provider ABA practices, with the exact multiple depending on factors like payer mix, provider stability, and growth opportunities.
What does the sale process for a Memphis ABA practice involve?
The sale process includes three main stages:
- Preparation – organizing financial records and contracts, and creating a compelling growth narrative.
- Marketing – confidentially presenting the practice to qualified buyers and generating competitive offers.
- Due Diligence – a detailed review by the buyer of financial, operational, and compliance aspects before finalizing the deal.
What should owners consider about their role and the future after selling their ABA practice in Memphis?
Owners should consider whether they want to retire, continue clinical work without management duties, or take on a leadership role in the new organization. These preferences affect the type of buyer and deal structure. Additionally, planning for financial outcomes such as earnouts or equity rollover arrangements is important, as well as ensuring the buyer respects the team culture and legacy.