Why big chains want to buy your physical therapy practice

You'll probably get them too. Those phone calls, those emails. “We'd love to talk to you about the future of your practice.” Large chains and investment funds are increasingly coming to practice owners.

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In 2024, investment companies were among 46% of all acquisitions involved in the healthcare sector. Even though that's just under a few years ago, it's still nearly half. Oral care is at the forefront, but you are also seeing the same movement in physiotherapy and other paramedical sectors.

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What does this mean for you as a practice owner?

The Consolidation Wave: Why Everyone Wants to Buy

The reason is simple: economies of scale. Larger chains can do things that you, as an individual practitioner, cannot do.

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They negotiate with insurers from a much stronger position. Instead of one practice with 500 patients, they talk to 10,000 patients on behalf of twenty practices.

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In addition, they share their back office. HR, financial administration, marketing, purchasing: all the costs you currently bear alone are spread across multiple locations. according consulting firm JBR this is one of the main reasons why private equity is so active in the healthcare sector.

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And let's be honest: for many practitioners, that also sounds attractive. Spend less time on administration and finally focus on what you're good at.

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What makes your practice interesting?

Not every practice is equally attractive. There are a few things they're really looking at.

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• Your cash flow is king. A stable, predictable turnover with healthy profit margins. If your practice is structurally profitable and not too dependent on one major health insurer or you as a person, then things will be interesting.
• Location plays a major role. A practice in a growing region, easily accessible and ideally in a health center with other disciplines. Not only do they think about what you do now, but also what they can do with it tomorrow.
• Your staff makes the difference. Do you have a team that runs and stays well after a takeover? Then you are worth a lot more. Practices that run entirely on the owner are less attractive.
• Growth potential is worth its weight in gold. Can you expand? Is there room to hire more therapists? Buyers are happy to pay for future music, as long as they can see how the song sounds.

What is your physical practice actually worth?

In the healthcare sector, EBITDA multiples are usually used. EBITDA stands for your profit before interest, taxes and depreciation, in other words, your operating result. You multiply that profit by a factor (the multiple). It usually lies in the healthcare sector. between 5 and 7.5.

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Suppose your practice makes €100,000 EBITDA per year. With a multiple of 6, you end up at €600,000. But that multiple of 6 wasn't given out of hand. It depends on how attractive your practice is.

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Larger practices often receive higher multiples. Stable contracts, a well-functioning team and growth potential also drive the multiple up. For smaller practices or practices that are highly dependent on the owner, you see multiples of 4 or 5.

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Appreciation is a starting point. The final price depends on negotiations, market conditions and how much the buyer wants your practice.

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To sell or not: the pros and cons

The benefits of selling are clear. You will receive a large sum of money. No more stress about staff, administration and health insurers. And often you can keep working as a therapist without the burden of being an entrepreneur. Finally, focus on treatment again.

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But there are also snags.. You lose your autonomy. There is a layer of management above you that can have different priorities. That personal relationship with your patients, that unique atmosphere that you have created: that can change.

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And then there is the financial side. Many deals are not paid in full cash. Part of it often lies in an earn-out: you will only receive money if the practice achieves certain results in the coming years. That means that you still stay involved and depend on how the new owner does it.

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There are also benefits to staying independent. You decide what your practice looks like. You choose your own team, your own way of working. But you do have all the headaches and responsibilities.

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Negotiation: what should you pay attention to?

If you decide to sell, keep these three things in mind:

1. Earn-outs are often a breaking point. The buyer links part of the payment to future results. You may have to keep working for years, but you are no longer in control. Make sure the conditions are crystal clear and that you can control what matters.
2. Non-compete clauses are standard. But note how broad that clause is. Are you no longer allowed to work in healthcare at all? Or just not within 10 kilometers? And for how long?
3. Your staff is a big focus. What happens to your team? Will they remain employed? Under what conditions? Make sure there are clear agreements about this.

There are also alternatives

Selling to a large chain isn't the only option:

• Collaborate with other practices can give you many advantages of scale without giving up your independence. Think of joint purchasing, shared back office, or negotiating with insurers. You remain the owner, but you get the benefits of a bigger picture.
• Selling to your own team is also an option. If you have good people who want to take over, you can transfer the practice internally. Often fiscally attractive and you know that your business will be in good hands.
• Shared services is also possible. Think of a joint practice manager who works for multiple practices, or sharing expensive equipment. You remain completely independent, but you share the costs.

The choice is yours

Selling isn't giving up. It can be smart. But it's not the only way either.

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Take the time to make this decision. Don't get hounded. Talk to other practitioners who have taken the step. Get advice from people who understand valuation and negotiations. And above all: know what you want.

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What if you've sold your practice and suddenly have the freedom to do something else? Then there are more options than you think. Some therapists choose to work abroad, for example in Switzerland, where you can work with a Dutch diploma and where the employment conditions are a lot more attractive. Just treat yourself, without the worries of a practice owner.

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By the way, at takeoff we work with a specialized partner who can help practitioners with these types of processes. We'll tell you more about that soon, but if you're already interested, feel free to send us an email or get in touch. We are happy to think along with you.

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