How to Prepare Your PT Practice for Sale: An 18-Month Checklist

The most common mistake PT practice owners make is deciding to sell and then immediately contacting buyers. The decisions made in the 12 to 18 months before you go to market have more impact on your final sale price than almost anything that happens during the transaction itself. This checklist covers the most important preparation steps, organized by time horizon.

18 Months Out: Structure and Ownership

Reduce Your Personal Clinical Production

If you treat patients yourself, this is the single most important thing you can do. Practices where the owner generates more than 25% of revenue are discounted significantly by buyers. The goal is to demonstrate that the business operates independently of you. Start transitioning your patient panel to other therapists, hire additional clinical staff if needed, and track your personal production percentage as a KPI you actively manage down.

Build a Management Layer

Identify your strongest clinic director or lead therapist and invest in their leadership development. Buyers want to see that someone other than you runs day-to-day operations. Even a single strong operations manager or clinic director can meaningfully increase buyer confidence and the multiple they're willing to pay.

Review Your Lease Terms

Buyers acquiring your practice need to be able to assume your leases. Leases with fewer than three years remaining, personal guarantee clauses that don't transfer, or right-of-first-refusal provisions for the landlord can complicate or delay a transaction significantly. Review all leases now and, where possible, negotiate extensions or cleaner assignment language before going to market.

12 Months Out: Financial Hygiene

Convert to Accrual Accounting

Most PT practices run on cash-basis accounting, which understates EBITDA relative to the accrual-basis financials buyers use to evaluate practices. Converting to accrual — recognizing revenue when services are rendered rather than when payment is received — presents your financials in the format buyers and their auditors expect, and provides a more complete picture of practice performance than cash-basis reporting. Whether it increases or decreases your reported EBITDA depends on your specific AR position; the primary benefit is that it eliminates a source of uncertainty that buyers would otherwise price into their offers. Do this well before your sale so you have at least one full year of clean accrual-basis financials to present.

Document Every Addback

An addback is any expense incurred by the current owner that a new owner would not incur: personal vehicle expenses, above-market owner salary, family member compensation above market rate, one-time legal fees, startup costs for a location since closed, and similar items. Create a written log of every potential addback with supporting documentation. Buyers and their auditors will scrutinize every adjustment — the more organized and defensible your addback file, the more will survive due diligence intact.

Clean Up Your AR Aging

Buyers look carefully at accounts receivable aging as a proxy for billing health. A high proportion of receivables older than 90 days signals billing problems that can suppress your valuation. Work with your billing team to reduce aged AR before going to market, and consider a billing audit to identify and correct any systemic coding issues.

6 Months Out: Operational and Compliance

Conduct an Internal Compliance Review

Buyers will conduct a chart audit during due diligence. You should conduct your own first. Focus on the areas most commonly flagged: Medicare and Medicaid billing compliance, supervision ratios for PTAs and aides, documentation completeness for each visit, and coding accuracy. Identifying and correcting issues before buyers find them is far better than having to renegotiate deal terms in the middle of due diligence.

Organize Your Corporate Records

Buyers' attorneys will want to see your corporate formation documents, operating agreements, any prior ownership changes, existing contracts, employment agreements, and insurance policies. Gathering these documents takes longer than most sellers expect. Create a secure digital folder now and populate it methodically. The practices that move through due diligence fastest are those that have their data room essentially pre-built.

Diversify Your Referral Sources

If 40% or more of your patients come from a single physician referral source, buyers will price in the risk that this relationship doesn't transfer to new ownership. Spend the months before your sale building additional referral relationships: direct access marketing, employer contracts, sports team relationships, and community outreach can all help diversify your patient acquisition mix.

The Final 3 Months: Documentation and Readiness

1. Compile three years of tax returns and profit and loss statements
2. Prepare a current accounts receivable aging report by payer
3. Document your referral source breakdown by physician and channel
4. Prepare a current employee roster with tenure, role, and compensation (names can be redacted)
5. Document your payer mix as a percentage of gross billings and collections
6. Prepare a location-by-location revenue and EBITDA breakdown if you have multiple sites
7. Gather copies of all leases with key terms highlighted

Sellers who complete this checklist consistently receive higher offers, move through due diligence faster, and close deals with fewer re-trades. The preparation phase is not glamorous work, but it is the highest-leverage activity available to a practice owner who wants to maximize their outcome.