What a rehab clinic is actually worth
Buyers do not pay for revenue; they pay for profit that survives the handover. So the first CFO job in any physio deal is normalization: price the selling owner's treatment hours at market associate rates, strip personal costs out of the statements, and see what the clinic earns as a business rather than as a job. Plenty of clinics listed on goodwill turn out to be a well-paid caseload with rent attached.
Then the revenue gets graded, because in rehab not all dollars age equally:
- Payer mix. Extended-health and private-pay revenue is fast-collecting and durable; a heavily MVA-weighted book carries HCAI receivable lag, insurer short-payments and exposure to auto-insurance reform.
- Referral concentration. A caseload fed by two surgeons or one family health team is a relationship risk, not a moat, until it is diversified.
- Clinician dependence. If the departing owner treats 30 hours a week, you are buying a vacancy; retention terms belong in the price.
- Receivable quality. Aged insurer claims and approved-but-unbilled treatment plans need their own diligence line, not a trusting glance.
Financing the purchase like a banker reads it
Walla Assaf came to public practice from banking and corporate finance, which changes how the file gets built: we prepare the package a credit committee actually wants, normalized statements, a defensible cash-flow forecast with the debt service on it, and a clear story on payer mix, before anyone asks. Goodwill-heavy clinic deals lean on cash-flow lending, so the forecast is the collateral.
Where the lender wants CPA-prepared statements, our Compilation and Review Engagements supply them, and Business Financing Advisory runs the approach to lenders as its own workstream. Sellers will often push for a share sale to reach the $1.25 million lifetime capital gains exemption; that is negotiable, but it should be priced, since the buyer inherits history and forgoes fresh depreciation. We model both structures so the negotiation happens in numbers instead of adjectives.
Growth also eats working capital in a way rehab owners feel before they can name it. Every new MVA file adds treatment delivered today and cash arriving months from now, so an expanding clinic can be profitable on paper and short at payroll. We size the operating line to receivable days by payer before the growth push, not after the first missed transfer, because a facility negotiated calmly is always cheaper than one negotiated urgently.
Associate buy-ins that keep your best clinician
The cheapest acquisition is the associate who never leaves to open across the street. A working buy-in needs three things agreed while everyone still likes each other: a valuation method fixed in advance rather than negotiated during a resignation, staged tranches so ownership follows commitment, often with vendor financing repaid from distributions, and a shareholders agreement that already answers exit, disability and deadlock questions.
One structural constraint is unique to this profession: a physiotherapy professional corporation may only issue shares to College members. A physiotherapist associate can buy in directly; a star kinesiologist or RMT cannot hold PC shares at all, and giving them real economics takes a different structure designed before promises are made. We flag this early because unwinding a promised equity deal is far more expensive than structuring it right.
The monthly numbers that steer all of it
Deals are occasional; the discipline is monthly. Our Fractional CFO engagement gives a clinic, or a group of them, a short management pack and a standing meeting to act on it. For rehab clinics the pack centres on a handful of numbers:
| Metric | What it decides |
|---|---|
| Clinician utilization | Hiring, scheduling and whether a new associate is fed or starving |
| Revenue per visit by payer | Pricing moves and which payer mix to grow on purpose |
| Cancellation and no-show rate | Reminder policy, deposit policy and true capacity |
| Receivable days by payer | Collection effort, insurer escalations and the working-capital line you need |
| Wages as a share of collections | The margin call: rates, mix or roster |
For a multi-site group the same pack runs per location, because a strong flagship hides a bleeding satellite for years. This is the standing version of our brand promise: your accountant files your taxes, we help you decide, whether the decision is a second Mississauga location, an associate's first tranche, or walking away from an overpriced book. It starts with a free 15-minute discovery call and a scope quoted in writing.
