Business for Sale, Would I Buy It? | Physical Therapy

Alright, so in this edition of “Would I Buy This Business”, we are looking at physical therapy occupational, and speech therapy practice. Okay, so a business offering these services specifically to people who probably got a doctor’s referral or had some issue where they need to work on these specific things. Let’s look at the metrics. The asking price is 2.2 million, gross revenue is just over 2 million [2,082,738], and the cash flow is [564,867]. So they are right about four times multiple asking price for this business, which again for businesses this size, generally speaking, is on the higher end. But maybe there’s something compelling about it that makes it worth more of a premium. It’s a great opportunity to own a well-established, highly regarded business with a dedicated loyal patient base of approximately 150 clients and around 550 therapy visits a week. It’s been in business for 13 years. Let’s see. This practice features a capable experienced team ready to assume the owner’s role. It doesn’t say here whether the owner is licensed or specialized, has experience in one or more of these kinds of treatments. So if the owner did, you have to replace the owner. And you don’t have that experience that may cut into that SDE making the price up even higher. It’s also a service business so there’s not a lot of fixtures and equipment required. So I’m just not sure that 4X multiple makes sense. Says the practice is recession-proof. Yes, people are always gonna need these, but it has a lot to do with whether they’re private pay or insurance pay. If they’re paying with insurance they will continue to get it. If they’re private pay that definitely has an impact as the economy ebbs and flows whether or not people are willing to pay out of pocket for some of these things. If they figure they can get away without it or maybe they should do 12 sessions but they only can do six cause they’re paying privately. So service businesses in general I like. I like recurring cash flow. This has some element of that. I like high margins, this is 25% that’s not super high. And I like businesses that are priced well, and this one to me seems a little high. So I might dig in a little more but on the face of it and especially depending on that experience requirement for the owner, this is more than likely one I would pass on. 

Here’s a little about this series. CapForge’s owner and founder gives us a little behind-the-scenes on what a good or bad business would be. CapForge helps tons of clients either buy or sell business and Matt was a business broker before starting CapForge. Let’s look at some of these businesses for sale and see if Matt would be interested in buying them.