The Documents You Need Before You Sell a PT Practice

Buyers do not pay for what you tell them. They pay for what they can verify. The documents you have ready decide how fast a sale moves and how much of your price survives diligence.

Here is what to gather and why each item matters.

Financial records

Profit and loss statements, three years. This is the starting point for every valuation. Buyers look for trends. Steady or rising earnings support a stronger price. A sudden drop raises questions you will need to answer.

General ledger. The P&L shows totals. The general ledger shows each transaction. Buyers use it to test your adjustments. If you say a $15,000 expense was a one-time cost, the ledger is where they check.

Payroll records. Payroll is usually your largest expense. Buyers want to see who is paid what, including you. Your own pay matters because buyers adjust it to a market salary for whoever runs the clinic after you.

Your P&L should match your tax returns. If it does not, ask your CPA to explain the differences in writing before you go to market.

Also list your adjustments. These are expenses a buyer will not carry after closing. Examples include a family member on payroll who does not work in the clinic, or a car run through the business. Each adjustment needs a clear note and a source document.

Here is a labeled hypothetical. Say your P&L shows $200,000 in EBITDA, and you document $30,000 in owner-specific expenses. Adjusted EBITDA is $230,000. At 3.5x, that $30,000 adds $105,000 to the price. Without proof, a buyer will not count it.

Clinical and revenue reports

Visit reports by provider. Buyers want to know who generates your visits. If one therapist drives a large share of volume, that person is a risk. If volume is spread across the team, that is a strength.

Payer mix. This shows where your revenue comes from by insurer and program. Buyers compare reimbursement rates and concentration. Heavy reliance on one payer can lower your price. A balanced mix supports it.

Pull both reports for at least the last twelve months. Three years is better if your system allows it.

Your lease

Your lease often decides whether a deal can happen at all. Buyers check three things:

• How much term is left
• Whether the lease can be assigned to a buyer
• Whether the landlord must consent

A short remaining term worries buyers. They are paying for a location and its patients. If the lease ends soon after closing, that value is at risk. Start lease conversations early.

Staff, contracts and equipment

Staff list. Include each person's role, start date, pay, hours and licenses. Note who is full-time, part-time or contract. Buyers use this to plan staffing after the sale.

Employment and contractor agreements. Buyers check for noncompete and nonsolicitation terms, bonus promises and notice periods. Missing agreements with key therapists are a common concern.

Vendor and service contracts. This includes your EMR, billing service, equipment leases and any marketing agreements. Buyers want to know what transfers, what can be canceled and what it costs to exit.

Payer contracts. Some payer agreements do not transfer automatically. Your transaction attorney can help you understand what applies in your case.

Equipment list. List each major item with its age, condition and whether you own or lease it. In an asset sale, equipment is part of what the buyer is purchasing. A clear list prevents disputes about what is included.

Note anything that needs repair or replacement soon. Buyers will find it anyway. Disclosing it early builds trust and avoids last-minute price cuts.

How to organize it all

Create one folder with a subfolder for each category above. Name files clearly, with dates. Keep a simple index of what is in each folder and what is still missing.

This is the core of what a buyer will ask for in diligence. Having it ready does three things:

• It shortens the time from letter of intent to closing
• It reduces the chance of a price reduction late in the deal
• It signals that you run a disciplined clinic

Your next step

Start with the three years of profit and loss statements and your lease. Those two items tell you the most about where you stand. Gather them this week, and note anything you cannot find.