Companies That Buy Mental Health Practices: A Comprehensive Guide to Selling

 

 

Selling an established or struggling mental health practice can be cumbersome, especially when you are not in the business market. Some challenges include finding appropriate companies that buy mental health practices, meeting the complex regulatory and legalities associated with behavioral health business transfer, and meeting clinical standards. Some psychologists find it discouraging, but this guide will help you understand all the processes in one go!

Strategique Partners are behavioral health business consultants experts who buy and sell mental health practices and guide entrepreneurs!

Why Companies Want to Buy Your Mental Health Practices? 

Due to the growing demand for mental health practices in the United States, business owners seek well-established or at least running behavioral health businesses to step into the market without the fuss of startup planning. 

According to the National Alliance on Mental Illness, one in five adults in the US experiences mental illness each year. This makes the mental health business extremely demanding and profitable, maintaining quality standards and being under proper management.

However, for some people,  carrying on this extremely delicate business can be difficult due to unforeseen circumstances that make it inevitable to avoid selling!

Criteria of Companies Buying Your Mental Health Practices

Companies that buy mental health practices look for a setup that generates a certain amount of revenue each year. Some of the checklists they prepare to evaluate your business potential include:

• How much the organization has grown since the start of its operations
• Is the business running on a proper business plan with policy implementation
• Where does the business stand in terms of repute and quality service provided to its clients
• What type of treatment services are provided
• How much the organization is qualified in terms of licensing and accreditations
• To what extent it may require renovations or financial inputs

It’s not a hard, fast rule that an organized company will buy your mental health practice. It could be anyone you just need to know the right buyer!

 

Companies That Buy Your Mental Health Practice: Reach To Your Type

Your firm’s buyer could be anyone from a potential staff to an organized behavioral health buying business consultant. However, choosing the right one with the right price and who will continue your legacy is one of the most difficult ventures in the behavioral health business. Companies that can be a potential buyer include:

Private Equity Firms

Nowadays, private equity firms are in the limelight of the behavioral health business world. These firms buy behavioral health businesses, maintain them, and sell them for a better profit. 

Traditionally, private equity firms enter a business and grow it with more inward finances, making it reputable until they find a potential buyer who could maintain its integrity and grow it for clients. Finding one is a good option when looking for a sound buyer for your mental health practice.

Hospital or Mental Health Practice Owner

Hospitals often find it feasible to expand their business services through private practices. Usually, such buyers look for options to expand their outpatient services. The deal majorly relies on the extent to which the mission of both parties aligns in terms of service provision.

Individual Entrepreneurs

Wealthy individuals who have just graduated from psychology MD often seek established and running mental health practices to put their fresh minds into practice and build a reputation. Complexities associated with such people are often big but can be well managed if a behavioral health business consultant opts for signing the deal.

Insurance Companies

In a unique business venture, many private insurance companies in the US are interested in potential mental health practices through which they can reduce treatment costs and streamline their insured healthcare operations. Finding an insurance company can be a profitable and reputed option.

Selling Your Mental Health Company: Steps to Take

As you have gained enough knowledge on the companies buying, let’s dive into how one can sell its mental health company to buyers in the behavioral health market.

Prepare Your Facility for the Buyer

Nobody is going to buy a mental health practice if it has issues beyond repair. You need to make your facility functionally sound. The three most important considerations that make a mental health practice ready to buy include:

• Operational Efficiency: Ensure your practice runs smoothly without any operational incompatibility.
• Financial Chores: Align your finances and income statement to showcase what you are offering.
• Legal Requirements: make your licenses and accreditations up-to-date and readily available on demand.

When all of the requirements are fulfilled, it becomes easier for buyers to evaluate your setup. 

Assessing the Market Value

Assessing the market value of your business is crucial before diving into the selling process because it helps to understand your market position correctly. Finance valuation will be performed in the following manners:

• Asset-Based evaluation: what type and how many assets are present
• Market Position: Assess where the prices of your services stand in terms of market 
• ROI-Based: how much your annual earnings provide you in the location

In addition to the above, intangible assets such as reputation and client retention influence your market evaluation!

Define Your Mental Health Practice Features

Buyers often look for features in mental health practices that can take on their legacy of work or offer a certain type of program in which they are interested. While planning on selling, you should also showcase your business feature in a way such as:

• What types of treatment are you providing in terms of mental health
• Types of treatment programs offered
• Modalities and utilities provided to clients in the facility
• The experience and qualified staff you have
• Administrative roles your facility has

All such features make it easy for buyers to assess whether the facility is suitable for their future endeavors.

Finding the Right Buyer for Your Facility

After all of your management-related preparations, the last step is to find the appropriate buyer for the mental health facility who pays the right amount. Some options mentioned in the above companies section can be opted for. However, you can take the following steps to streamline the process:

• List your business online on platforms specific to the behavioral health market.
• Find the right broker that can assist you in this matter.
• Use your professional network to increase word of mouth about your business listing.

Strategique Partners can assist you in finding the right buyer and evaluating your business. Consult Today!

Be Careful Regarding Legal and Regulatory Considerations When Selling

Remember the federal and state regulatory and licensing requirements while selling your mental health practice. Contact your psychological association to ensure that all the requirements and ethics are fulfilled, as any flaw or irregularity can be a disaster in the future!

Mistakes to Avoid While Selling Your Lifelong Mental Health Practice Business

Selling a mental health practice is not as easy as it seems. Always take care of certain things before selling:

• Carefully complete the licensing and regulatory requirements
• Sign the Non-Discloser Agreement
• Complete the due diligence for both parties
• Draft a purchase agreement under legal advisors
• Notify stakeholders
• Clear out your pending finances

Get help from a business advisor who can manage it all for you in one go!

Benefits of Getting Help From a Broker: Strategique Partners

It can be hard to decide about the future of your once bread-and-butter mental health practice. But with the right expertise and guidance, it can be smooth as butter. Going with an expert behavioral health broker for your business selling would not only offer you ease but also:

• Comprehensive Finance Valuation
• From Finding the Right Buyer to Closing the Deal and transfer of assets
• Behavioral health startup guide for your future endeavors
• Company development and management for the buyer
• M&A during the buying and selling of mental health practice

Consult us today to find your options and start the next journey in business!

Frequently Asked Questions about Selling Mental Health Practice

Mental health business owners often ask questions about their business, such as:

How to Value a Mental Health Business?

The valuation of a mental health business is based on tangible assets, such as buildings, utilities, programs, staffing, revenue, patient intake, and real estate, and intangible assets, such as reputation, professional network, and client retention. A behavioral health business consultant can better assess the value with solid reasoning.

Who Is the Largest Payer for Mental Health?

Medicaid, a federal insurance provider, is the single largest payer of mental health services to any mental health facility, aiming to boost mental health treatment services all over the United States.

What Can I Sell for Mental Health?

First, you will need to build a business plan covering your feasibility analysis and the programs you choose. Then, with market research, you will be able to understand clients’ demands, and you can sell your mental health services according to those demands to generate more revenue.

Do I Need a Broker to Sell My Mental Health Practice?

Whenever you plan to sell your mental health practice, it is advised to have a lawyer, behavioral health business consultant, and financial expert on your side to ensure all the regulatory, legal, and financial requirements are met without any mistakes. Selling a mental health practice demands many precautionary measures and legal transfer processes.