Asset Sale vs. Stock Sale: What PT Owners Should Know

There are two basic ways to sell a physical therapy practice. The buyer can buy the clinic's assets, or the buyer can buy the company that owns them. Those sound similar. They are not.

The structure decides what the buyer takes, what you keep, and which problems follow you after closing. It also affects your taxes. Here is how we explain it to owners.

What an asset sale is

In an asset sale, your company sells the things that make the clinic run. The buyer pays for them, usually in cash at closing. Sometimes part of the price comes later through a seller note or an earnout.

Your company stays yours. It just no longer owns the clinic. After closing, you typically use the proceeds to pay off any debts, then wind the company down with help from your CPA.

What transfers to the buyer

The buyer and your attorney will list the assets in the purchase agreement. In a PT practice, that list usually includes:

• Treatment tables, exercise equipment and modalities
• Furniture, computers and office equipment
• Patient relationships and records, transferred under the rules that apply to health records
• The practice name, phone numbers, website and social accounts
• Goodwill, meaning the reputation and referral relationships you built

Some things usually stay with you. Cash in the bank and accounts receivable are often excluded, though this is negotiable. Your lease may transfer, but only if the landlord agrees to an assignment. Payer contracts and credentialing are worth raising early, because buyers handle them in different ways.

Employees do not transfer automatically. The buyer generally offers jobs to the staff it wants to keep. Your team members then become the buyer's employees on day one.

Liabilities stay with the seller's company

This is the part owners most often miss. In an asset sale, the buyer takes only the liabilities it agrees in writing to take. Everything else stays with your company.

That cuts both ways. The buyer is protected from past problems it did not agree to. You remain responsible for what happened while you owned the clinic. Old billing errors, past payer audits, and pre-closing disputes typically stay on your side.

So clean records matter. If you know about a billing issue or a pending dispute, fix it or disclose it before the sale. Your transaction attorney can tell you how your specific agreement allocates these risks.

How a stock sale differs

In a stock sale, the buyer purchases your ownership in the company itself. For many PT practices, that means membership interests in an LLC or shares in a professional corporation. The company, with all its history, changes hands.

Because the buyer is acquiring ownership interests, these deals involve securities. That is outside what Truecrest handles. A registered broker-dealer handles stock sales and sales of membership interests. The same applies to any structure where you keep an ownership stake after closing.

We are not saying one structure is always better. We are saying we work on one of them, and we want you to know why.

Asset sales fit the way most independent PT practices are bought. The buyer gets equipment, patients, a name and goodwill. You get cash at closing and a clear line between your ownership and theirs.

They also keep our role simple and focused. We represent you, the seller, and only you. We prepare the practice, find buyers, run the process, and negotiate the terms of the asset purchase.

If a buyer pushes for a stock deal, that is not automatically a bad sign. It just means a different kind of advisor needs to be involved. We will tell you plainly when that is the case.

Taxes differ, so talk to your CPA early

The tax outcome of an asset sale and a stock sale can be very different. In an asset sale, the purchase price is divided among the assets being sold. That division, called the allocation, affects what you owe.

Buyers and sellers often want different allocations. Your entity type matters too. We cannot give you tax advice, and you should not rely on a blog post for it. Bring your CPA in before you sign a letter of intent, not after.

Your next step

Pull together a simple list of what your clinic owns. Include equipment, the lease, payer contracts, your name and web presence, and any known liabilities. Then sit down with your CPA and ask how an asset sale would work for your entity.

That one list will make every later conversation faster and more accurate. If you want a sense of value while you do it, our free, confidential valuation is a good place to start.