Valuing a physical therapy practice is not like valuing most other businesses. Paul Martin, President of Martin Healthcare Advisors, walks through how a valuation actually gets built.

Step one is real adjusted EBITDA: add back interest, income taxes, depreciation, true one time expenses, and owner compensation adjustments, then subtract an industry replacement salary (often $125,000 to $150,000) and keep personal expenses separate. Step two is the multiple, which comes from risk and industry comparables. A single clinic practice tends to land around 2 to 3. Large platforms with many clinics can reach 10 to 13. Earnings, market, payer, and referral risk, plus compliance, owner dependence, clinic size, and transition risk, move you along that range. Multiple times adjusted EBITDA is your enterprise value.

Chapters00:00 Valuation Myths Revealed00:08 Why PT Valuation Is Different00:09 Step 1 Real EBITDA00:09 Adjustments One Time Costs00:09 Owner Pay And Add Backs00:09 Step 2 Picking The Multiple00:09 Size And Comparable Sales08:48 Earnings Risk Breakdown10:44 Market Payer Referral Risk13:40 Other Risks And Wrap Up16:50 Final Value And Next StepsAbout Martin Healthcare AdvisorsMartin Healthcare Advisors helps physical therapy owners grow their businesses and plan successful transitions. Paul Martin is President of Martin Healthcare Advisors.Questions about anything covered here? Comment below and let's talk. https://calendly.com/mhameetings/30min