Two PT practices with the same earnings can end up with very different results: one gets a strong offer, the other gets none. The difference is almost always the quality of your EBITDA.

In this episode, Paul Martin, President of Martin Healthcare Advisors, explains how acquirers value a practice using two numbers, EBITDA and the multiple. On $1 million of EBITDA, the gap between a 4x and a 6x multiple is $2 million. What moves that multiple is how much an acquirer trusts your earnings to keep coming after you step back.

Paul covers the five drivers that raise or lower your multiple, why a quality of earnings review is the moment every weak spot shows up, and how to get your numbers ready well before you go to market.

Want to talk through what drives your practice's value? Book a call with Paul: https://calendly.com/mhameetings/30min

Chapters:
0:00 Same earnings, different offers

0:38 EBITDA in plain English

1:30 The multiple: a $2M difference

2:34 What quality of earnings means

3:42 1. Clean, accurate financials

5:26 2. Adjustments you can defend

6:34 3. How much it depends on you

8:34 4. Concentration and bus risk

9:26 5. Predictability and growth

10:42 Getting ready before you go to market

Most PT owners add both owner salaries back to the bottom line and call it profit. An acquirer adds them back, then subtracts what it costs to replace those people, and the number gets a lot smaller. That gap is the first uncomfortable truth Paul Martin puts in front of owners.

Paul is President of Martin Healthcare Advisors and a physical therapist who built a company from three clinics to 21 in three years. In this conversation with Jimmy McKay on PT Pintcast: why a transition is a process rather than an event, the audit he calls a living autopsy, the three levers that move what a practice is worth, the 30-day test, and how many years out the work really starts.

Book a call with Paul: https://calendly.com/mhameetings/30min
More at martinhealthcareadvisors.com

0:00 The mistake

2:07 Process, not an event

8:53 The living autopsy

12:08 The three levers

16:48 The 30-day test

18:10 When to start

30:50 The Parting Shot

Who should represent you when you transition your physical therapy practice? Paul Martin's answer comes from both sides of the table. In 1996 he and two partners sold the company they had built from 3 clinics to 21 clinics in three years, and the specialist they hired taught him something he has built on ever since: who represents you determines your outcome. He then spent a year inside an acquirer's acquisition department, working on more than 17 transactions and over $500 million in volume in twelve months.

In this episode Paul breaks down the three ways a PT owner can be represented, what each one actually does well, and why he built Martin Healthcare Advisors to combine them.

0:00 Don't be the only one at the table who has never done this

0:35 1996: three partners, 21 clinics, and one specialist

1:20 Who represents you determines your outcome

1:55 Inside an acquirer: 17 transactions in a single year

2:30 The credentials that changed how he sees the process

3:00 What Main Street business brokers do better than anyone

4:00 What large investment banking firms bring

5:05 Building the hybrid: bankers, CPAs, and people who care about the outcome

5:55 The piece nobody else has: five PTs who have already been through it

6:55 Different teams for different sized companies

7:45 Why acquirers respect the process

8:20 Whatever you do, don't go through it alone

Your practice is likely the largest business asset you will ever own. Going it alone means no leverage, higher risk of a confidentiality break, and the acquirer holding the steering wheel.

Martin Healthcare Advisors represents physical therapy owners, never acquirers. Learn more at martinhealthcareadvisors.com.