Generally speaking, when an investor wishes to acquire a business from its holders, the parties will agree on terms in the form of a purchase and sale agreement. The agreement will outline, among other things, the assets being transferred in an asset sale or the stock/membership interest being transferred if the investor is taking the business “turnkey.” In this way, the question of who owns the enterprise, and its assets, after the transaction has closed should be indisputable. 

Approximately 50% of physical therapy practices are known as “onesies” and “twosies.” This means that the practice is owned and operated by one physical therapist that runs one or two clinics. Although this business structure works very well for the physical therapist who owns the business, it also means the marketplace is fragmented, and many therapists are finding it more difficult to go up against big buyers.

Buying a physical therapy practice can be a lucrative investment and an excellent career opportunity for a physical therapist looking to make it on their own. However, regardless of the financial decisions you have made in your life, acquiring a private practice is a significant undertaking and is likely going to be stressful. The stress of the transaction and inexperience of buyers makes it easy to make any number of mistakes along the way, and any one of those errors could set you back, both financially and in opening your clinic. To help new owners avoid these pitfalls, we’ve gathered and explained some of the most common physical therapy practice mistakes buyers must avoid during their acquisition and ownership transition.

Valuing a physical therapy practice is part art, part science, and part math. Generally, the math and science, which we discuss below, is more easily calculated. It is the art – knowing how to sell a business and to whom – where true value is realized. For purposes of this article, we will discuss how to value a physical therapy practice where a controlling interest and/or 100% of assets are sold.