The market for telehealth and digital therapy practices in Michigan is expanding quickly. If you’re an owner, you are likely considering what this growth means for the future value of your practice. This guide offers insight into the current market, how valuations are determined, and the key steps in the sale process. Understanding your options now is the first step toward a successful transition, whether you plan to sell this year or in three years.
Market Overview
Michigan presents a favorable landscape for telehealth and digital therapy owners. The state saw a major shift toward digital care, a trend supported by recent legislation designed to expand telehealth coverage. Demand for behavioral health services is particularly strong. In 2021, telehealth accounted for 46% of all behavioral healthcare for Medicare beneficiaries in Michigan counties. This high adoption rate, combined with growth opportunities in rural areas, creates a robust environment. For practice owners, this translates to significant interest from a wide range of potential buyers and investors looking to enter or expand within the state.
Key Considerations for Sellers
A strong market brings motivated buyers, but they are also sophisticated. They will look closely at the details of your operation during due diligence. Preparing for their questions is critical.
- Regulatory and Payer Compliance. Buyers will verify your strict adherence to Michigan’s telehealth laws and HIPAA regulations. They will also analyze your contracts and reimbursement history with key payers like Michigan Medicaid and private insurers.
- Technology and Scalability. Your technology platform is a core asset. Buyers will assess its security, reliability, and ability to handle growth without major new investment.
- Patient Acquisition and Retention. A predictable stream of new patients and a loyal existing base are major value drivers. You should be prepared to explain your marketing strategies and demonstrate patient retention rates.
Market Activity
The national M&A landscape shows intense interest in digital health, with major companies making significant acquisitions. This trend is active in Michigan. We see strategic buyers acquiring local healthcare groups to expand their provider networks and technological capabilities within the state. This activity signals that Michigan is not just a participant but a target for growth. For owners of well-run telehealth and digital therapy practices, this creates a time-sensitive opportunity. The window to achieve a premium valuation is open, but timing your entry to the market correctly is key to capitalizing on these trends.
How Your Practice is Valued
Understanding your practice’s value is the foundation of a successful sale. Buyers don’t look at your net income. They look at Adjusted EBITDA, which is your practice’s earnings after normalizing for owner-specific expenses. This figure is then multiplied by a number based on market conditions and risk. Many owners are surprised to learn their practice is worth more than they assumed once their financials are properly prepared. Key factors that influence your valuation multiple include:
| Factor | Higher Multiple | Lower Multiple |
|---|---|---|
| Provider Model | Associate-driven | Solo owner reliant |
| Revenue Scale | Over $1M EBITDA | Under $500K EBITDA |
| Payer Mix | Stable insurance mix | High self-pay % |
| Growth story | Clear expansion path | Stagnant patient numbers |
A true valuation combines these numbers with a compelling narrative about your practice’s future.
The Sale Process at a Glance
Selling a practice is a structured journey, not a single event. It starts long before you speak to a buyer. The first phase is preparation, where you organize financials and define your goals. Next, we confidentially identify and approach a curated list of qualified buyers to create a competitive environment. This is different from just listing your practice for sale. The chosen buyer then conducts due diligence, where they verify all the information about your practice. This is where most deals face challenges, but proper preparation can make it a smooth process. The final step is negotiating the legal agreements and closing the transaction.
Planning for What Comes Next
The sale of your practice is a major financial and personal milestone. Thinking about the post-sale chapter is a key part of the process. Advance planning in these areas ensures the transition meets all your objectives.
Financial Planning
The structure of your sale has major implications for your after-tax proceeds. Planning for this can significantly change your net outcome.
Your Role After The Sale
A sale doesn’t always mean a complete exit. Many owners choose to stay involved. Structures like strategic partnerships or equity rollovers allow you to take chips off the table while maintaining clinical leadership and participating in future growth.
Preserving Your Legacy
You’ve built more than just a business. You’ve built a team and a base of patients who depend on your care. A thoughtful transition plan ensures your staff and patients are protected and your legacy continues.
Frequently Asked Questions
What is the current market environment for selling a telehealth practice in Michigan?
Michigan has a favorable market for telehealth and digital therapy practices. The state has seen a major shift toward digital care, driven by supportive legislation and strong demand, especially for behavioral health services. This creates robust interest from buyers and investors looking to expand in Michigan.
What are the main factors buyers evaluate when considering a telehealth practice purchase in Michigan?
Buyers focus on several key areas: 1) Regulatory and payer compliance—ensuring the practice complies with Michigan telehealth laws, HIPAA, and contracts with payers like Michigan Medicaid. 2) Technology and scalability—the security and growth potential of the technology platform. 3) Patient acquisition and retention—demonstrating effective marketing and a loyal patient base.
How is the value of a telehealth practice determined in Michigan?
Practice value is based on Adjusted EBITDA (earnings after owner-specific expenses) multiplied by a market-based multiple. Factors influencing the multiple include provider model (associate-driven vs. solo), revenue scale, payer mix stability, and growth potential. A compelling narrative about future growth also supports a higher valuation.
What are the key steps in the sale process for a telehealth practice?
The sale process involves four main phases: 1) Preparation—organizing financials and defining goals. 2) Buyer identification—confidentially approaching qualified buyers to foster competition. 3) Due diligence—buyers verify information about the practice. 4) Closing—negotiating legal agreements and finalizing the sale.
What should owners consider about their role post-sale?
Owners should plan whether they want a full exit or to remain involved. Options like strategic partnerships or equity rollovers allow owners to retain clinical leadership and participate in future growth while monetizing part of their investment. Planning this in advance helps meet financial and personal objectives post-sale.