Selling Your Practice to Your Senior PT

Many PT owners have a therapist on staff who could run the clinic. That person knows the patients, the staff and the referral sources. Selling to them can feel like the natural move.

It can work well. It can also go sideways if the terms are loose. Here is how an internal sale usually works and what to weigh before you start.

How an internal sale is structured

In the deals we handle, your senior PT buys the clinic's assets. That includes equipment, patient relationships, the clinic name and goodwill. They form their own entity to hold those assets. You keep your old entity and wind it down after closing.

The price is usually paid in a few parts:

• Cash at closing, often funded by a bank or SBA loan
• A seller note, where you are paid over time
• Sometimes an earnout tied to future results

We do not structure internal sales as a sale of your LLC or PC interests. We also do not structure deals where you keep a stake. Those involve securities and are outside what Truecrest handles. A registered broker-dealer handles them.

How the buyer pays

Most senior PTs do not have the full price in savings. Many turn to a bank or an SBA-backed loan. The lender will review your financials closely. They want to see that the clinic's cash flow can cover the loan payment and a fair salary for the new owner.

That review shapes the price. A lender will not finance a number the clinic's earnings cannot support. Your buyer should talk to a lender early. Loan rules and requirements change, so they should get current terms directly from the lender.

The seller note

A seller note means you lend part of the price to the buyer. They pay you back over a set period with interest. It closes the gap between what the lender will fund and the agreed price.

A seller note helps the deal close. It also keeps you exposed to how the clinic performs after you leave. If the new owner struggles, your payments may be late or stop.

Lenders sometimes place conditions on seller notes when they are part of a financed deal. Your transaction attorney and the buyer's lender need to agree on those terms. Your CPA should explain how the note affects your taxes.

Here is a labeled hypothetical, not a real deal. Say a single-location clinic earns $250,000 in EBITDA. At 3.5x, the price is $875,000.

The buyer's lender funds $700,000. You agree to a seller note for $175,000 over five years. That is $35,000 a year in principal, plus interest. Your cash at closing is $700,000 before fees and taxes.

The math is simple. The risk is in the $175,000 you have not been paid yet.

The transition period

Internal sales usually include a transition period. You stay on for a set time to hand off referral sources and support the new owner. A typical arrangement is part-time, with clear duties and an end date.

Put the details in writing:

• How many hours you work and for how long
• What you are paid for that time
• Which relationships you will introduce, and to whom
• When your role ends

A vague transition plan causes friction. A specific one protects both of you.

The pros and cons

An internal sale has real advantages. Your staff and patients see little change. The new owner already knows the culture. Referral sources already know the therapist.

Confidentiality is easier to keep. You are not marketing the clinic widely. You are also rewarding someone who helped build the practice.

The downsides are just as real. The price is often lower. One buyer means no competition, and the buyer's financing caps what they can pay. For a single location, the typical range we use as a starting point is 3.0 to 4.5x EBITDA. Internal sales often land near the lower end.

The relationship can strain. You are negotiating with someone you manage. Hard conversations about price can affect your working relationship if the deal does not close.

You may also carry more risk. A larger seller note means more of your money depends on the new owner's success.

Your next step

Before you raise the idea with your senior PT, learn what the clinic is worth. Also learn what a lender would likely support. Those two numbers frame the whole conversation.