Let’s Make a Deal


Where do you fit in?

By Paul Martin, MPT, CBI, M&AMI

The rehabilitation mergers and acquisitions market has seen tremendous growth in the last 12 months. Everything that you have learned in the past about the way in which acquirers and sellers navigate practice transitions has changed. Is that not exciting?

Yes it is. Based on the first half of 2015’s closed transactions and current deals in the pipeline, we are predicting that there will be over 40 transactions in the rehabilitation market this year. This is up from 26 transactions in 2014, and 2014 and 2015 in combination had more activity than the combined past 15 years. In addition, the speed, pricing, and structures of these deals are like nothing we have ever seen before. So what does this mean to you?

It is time to decide. If you are in a market that has not been through significant consolidation, it probably will not be long before it hits. And different from the acquirers from the past, these consolidators in many cases are forming partnerships with multi-clinic companies. Then they invest resources into growing these businesses, while maintaining the goodwill and relationships of the former owner/new partner.

So our view is that you need to decide now what your position will be. Do you want to consider growing by joining a regional or national company? Or do you want to develop strategies to grow and remain independent? Notice I did not mention “just wait and see what happens” as a viable option. That option could be suicide for your business.

If your decision is to consider a potential sale or partnership with one of the regional or national acquirers, we believe the following steps are essential to navigating a successful transition.

Screen Shot 2015-09-02 at 1.27.35 PM

1. Gain a full understanding of the value of your business. Have a business valuation performed by a professional. Make sure this value reflects specifically what the value of your business will be in today’s market. That means that it is essential that the professional have full knowledge of similar size companies and an understanding of actual current market transactions that have occurred with companies similar to your business. A pure accounting or financially based valuation will not get you to the right number for your business. This is a time to do an “assessment” of your business; structure, processes, reporting, staff, customer service, outcomes, etc., and consider whether your business is ready for a successful transition.

2. Consider all of your options based on that valuation. This is all-out strategic succession planning. Consider this. Based on the timing of your goals, and the timing of the market, is this the right time to consider a transition from your business?

3. Run your business through a professional sale process. If the strategy is to sell all or a majority stake in your business, hire a professional advisor and partner with them to run a professional sale process. This will ensure that you are getting the best price, structure, terms, and best fit for you and your business that the industry has to offer. You will probably do this only once in your lifetime, so take the time and put together a team to do it right.

4. Build your business skills with your new partner. The acquiring company will have a lot to offer you and your staff. Go into the relationship with an open mind and an open heart and you will gain valuable business skills from that experience. In addition, if you remain in an equity ownership position and your deal has been structured properly, there very likely could be a second big payday in your future!

In summary, this is a very exciting time in the rehab industry. Take the time now to make an informed decision on where you want to fit in this ever-changing marketplace—then never look back!


Paul Martin, PT, MPT, CBI, M&AMI president of Martin Healthcare Advisors, is a nationally recognized expert on health care business development and succession planning. As a consultant, mentor, and speaker, Paul assists business owners with building value in their companies. He has authored The Ultimate Success Guide, numerous industry articles, and weekly Friday Morning Moments. He can be reached at pmartin@martinhealthcareadvisors.com.

Copyright © 2018, Private Practice Section of the American Physical Therapy Association. All Rights Reserved.

Are you a PPS Member?
Please sign in to access site.
Enter Site!