7 Questions to Ask Before Buying a New Pt Practice

2026-08-21

Thinking of buying a physical therapy practice? Ask these 7 questions first to avoid costly mistakes and ensure a smart investment.

Buying an existing physical therapy practice can be a faster path to ownership than starting from scratch, but it comes with hidden risks. Before you sign anything, you need to dig into the practice’s financials, operations, and reputation. Here are 7 questions to ask before buying a new PT practice, with practical steps you can take this week.

1. Why is the seller really selling?

The seller’s reason for selling can reveal a lot about the practice’s true condition. Common reasons include retirement, health issues, or a desire to move on to other ventures. But be wary if the reason is vague or if the practice’s performance has been declining. Ask for a written explanation and verify it with your own research.

This week: Request a meeting with the seller and ask directly. Also, talk to staff, vendors, and local referral sources to get an independent read on the practice’s reputation.

2. What are the actual financials, and are they verified?

You need to see at least 3 years of tax returns, profit and loss statements, and balance sheets. Look for trends in revenue, expenses, and profit margins. A healthy PT practice typically has a net profit margin of 15% to 25% after owner compensation. Verify the numbers with an accountant who specializes in practice valuations.

This week: Hire a CPA to review the financials. Ask for a breakdown of revenue by payer (insurance, cash, Medicare) and by service (evaluation, treatment, etc.).

3. What is the patient mix and referral base?

A practice that relies heavily on one referral source or one payer is risky. For example, if 70% of patients come from a single orthopedic group, you could lose a huge chunk of revenue if that relationship sours. Also, check the age of the patient base: if it’s mostly Medicare, reimbursement rates may be lower than commercial insurance.

This week: Ask for a payer mix report and a list of top referral sources. Contact a few of those referral sources to gauge their loyalty to the practice.

4. What is the condition of the equipment and lease?

Physical therapy practices rely on specialized equipment like ultrasound machines, electrical stimulation units, and exercise equipment. Find out the age and condition of all equipment, and whether it’s owned or leased. Also, review the lease for the facility: how long is it, what’s the rent, and are there renewal options? A lease with 2 years left may force you to renegotiate soon.

This week: Get a list of all equipment with purchase dates and maintenance records. Review the lease agreement with a real estate attorney.

5. What are the staffing and culture like?

Your staff can make or break the practice. Ask about employee turnover, salaries, and benefits. Are the physical therapists licensed and in good standing? What’s the morale like? A high turnover rate could indicate management problems.

This week: Ask for employee contracts and a list of current staff. Consider conducting informal interviews with key staff to assess their commitment.

6. What is the practice’s reputation and online presence?

In today’s digital world, a practice’s online reviews and social media presence matter. Check Google, Yelp, and Healthgrades for reviews. A pattern of negative reviews about wait times or billing issues could be a red flag.

This week: Run a Google search for the practice name and read all reviews. Check their website and social media for consistency and professionalism.

7. What is the fair market value, and how will you finance the purchase?

Valuing a PT practice is complex. Common methods include a multiple of earnings (typically 1.5 to 3 times EBITDA) or a percentage of annual revenue (often 50% to 80%). Get a formal valuation from a professional. Then, decide how you’ll finance: cash, bank loan, or seller financing. Each has pros and cons.

This week: Get 2 independent valuations. Talk to a commercial lender about loan options and terms.

FAQ

Q: How long does it take to buy a PT practice? A: The process typically takes 3 to 6 months from initial contact to closing, depending on financing and due diligence.

Q: Should I use a broker? A: A broker can help you find practices and negotiate, but they charge a fee (usually 5% to 10% of the sale price). You can also buy directly from a seller.

Q: What is a typical down payment? A: If you’re using a bank loan, expect to put down 20% to 30% of the purchase price. Seller financing may require less.

Q: Can I negotiate the price? A: Yes, but be realistic. Use the valuation and your due diligence to justify your offer.

The bottom line

Buying a PT practice is a significant investment. By asking these 7 questions and doing thorough due diligence, you can avoid costly mistakes and set yourself up for success. Take action this week: hire an accountant, review the financials, and talk to the seller. The more you know, the better your decision will be.