For owners who hold the real estate their practice occupies, Mihama engineers an entity restructuring before the sale process begins. The operating clinical business is separated from the underlying real estate into two distinct legal entities: the Operating Company (OpCo), which runs the practice, and a Property Company (PropCo) — typically an LLC owned by the same principals — which holds the real estate and leases it back to the OpCo at the highest defensible Fair Market Value rent, substantiated by an independent third-party appraisal and governed by an arm's-length lease agreement. This is not a routine add-back. It is a structural transformation of the business that most owners — and most advisors — never execute.

The elevated rent modestly compresses the OpCo's EBITDA, which is valued at a 5x multiple. But it dramatically increases the PropCo's Net Operating Income (NOI) — and because institutional-quality commercial medical real estate trades at a 6%–7% cap rate, effectively a 14x–16x NOI multiple, Mihama is moving profit from a 5x valuation environment into a 14x–16x environment. That gap is where extraordinary, durable wealth is created. Every dollar Mihama shifts from the OpCo into the PropCo generates compounding net worth across both entities at closing — value that simply does not exist in a conventional, non-restructured sale.

Nearly every healthcare practice operates on cash-basis accounting for tax purposes — rational for minimizing current-year tax liability, but systematically destructive to valuation. Cash-basis statements chronically understate the true economic performance of any growing practice. Consider a simple example: a payer with a 60-day collection window. Under cash-basis accounting, revenue is recognized only when the check arrives — not when the patient was seen. For a practice growing month-over-month, this means two months of earned, billable revenue that legitimately belongs to the business never shows up on the P&L at all. The faster the practice is growing, the larger the gap between what the business actually produced and what the financials report. Mihama performs this conversion in-house, executing a GAAP-compliant restatement to accrual-basis accounting that surfaces revenue already earned but not yet collected from insurance carriers. This is not a bookkeeping exercise — it is a deliberate move to ensure the buyer is paying a multiple on the business's actual economic output, not an artificially deflated cash view of it.

Accrual accounting recognizes revenue when services are rendered, not when the payer remits — a lag that routinely extends 30 to 90 days in the PT billing cycle. In any growing practice, Accounts Receivable is perpetually expanding, meaning earned-but-uncollected revenue perpetually understates EBITDA under cash-basis reporting. Mihama's conversion restates those financials to capture what is already owed. Buyers accept — and require — accrual-basis EBITDA because it is the GAAP standard by which all institutional valuations are benchmarked. At a 5x multiple, $100K of newly recognized accrued earnings translates directly to $500K in additional sale proceeds — revenue that existed all along, invisible only because the books said so.

Most founder-clinicians have no reason to minimize their W-2 salary while running the practice — every dollar taken as wages is real cash today. But this logic inverts completely in the context of a sale, and Mihama executes the restructuring deliberately. Two moves: (1) Mihama reduces the owner's W-2 to a defensible market-rate replacement cost — typically a clinical PT salary (approximately $90K–$100K) plus a Clinic Director management stipend (approximately $15K–$25K) — flowing the excess directly into EBITDA as a documented add-back that every institutional buyer accepts. (2) Mihama structures compensation delivery through an S-Corp to legally eliminate FICA exposure on the distribution component of remaining owner income, further improving the reported cash flow on which your multiple is applied.

Every dollar Mihama shifts from your W-2 into EBITDA does two compounding things simultaneously. First, at a 5x multiple, it converts one dollar of forgone compensation into five dollars of sale proceeds. Second — and this is where the real amplification occurs — those five dollars are taxed at Long-Term Capital Gains rates: ~20% federal, rather than the combined W-2 effective rate of ~37% federal income tax + 15.3% FICA = 50%+. As a materially involved owner-operator, you are not subject to the 3.8% Net Investment Income Tax (NIIT) that applies to passive investors — making the rate differential even more favorable. A founder who reduces W-2 compensation by $185,000 gains $925,000 in additional sale proceeds at 5x. Because those proceeds are taxed at ~20% LTCG rather than ~52% on ordinary income, the net after-tax difference on that single structural adjustment can exceed $260,000 in real, durable wealth — captured at the closing table, not earned over years of continued operations.

Reimbursement rates are the single most direct lever on PT margins — yet most practice owners have never formally renegotiated their contracted rates with commercial payers. When Mihama helps a clinic secure a rate increase from a major commercial carrier, that improvement does not wait for a full fiscal year to appear in the valuation. Mihama's bankers apply a pro forma rate adjustment that retroactively restates historical revenue at the new contracted economics — making the full economic impact of the rate increase visible immediately in the EBITDA used to value the transaction. This is not a creative accounting maneuver. It is the standard methodology institutional investment banks use, because it reflects the economic reality the buyer will actually inherit.

The analytical rationale is airtight and universally accepted by institutional buyers: the acquirer steps into the new, higher contracted rate on day one of ownership. Valuing the practice on historical rates that no longer apply would be economically misleading — and analytically indefensible. Mihama therefore legitimately restates the financials to reflect the contract economics the buyer is actually purchasing. This adjustment requires only three inputs — all directly verifiable from the billing system and signed contract amendment — making it readily defensible under institutional due diligence scrutiny. Every dollar of newly secured reimbursement creates a compounding effect: it improves baseline revenue going forward and generates a retroactive EBITDA add-back that is multiplied at close.