How to Value a Physical Therapy Practice in Illinois

Physical therapy practices in Illinois are valued at 3x to 6x SDE or approximately 40–70% of annual gross revenue. Corporate PT consolidators (Athletico, ATI, Select Medical) have been active acquirers in the Illinois market, often paying strategic premiums above what individual buyers offer.

Payer Mix and Reimbursement Trends

Illinois PT practices serving predominantly commercial insurance and workers' compensation patients generate higher revenue per visit than Medicare-dominant practices. The ongoing trend of Medicare reimbursement cuts makes high-Medicare-concentration practices less attractive to buyers who model long-term revenue stability. Payer mix analysis is always a first step in PT practice valuation.

Therapist Retention

Physical therapy is a relationship-driven practice — patients follow their therapist, not just the clinic. Practices where multiple licensed PTs have established patient relationships are more valuable than those where the owner-therapist personally treats most patients. Multi-therapist practices with PT assistants and a strong front-office team transition more smoothly and hold value better.

Physician referral relationships are another key value driver. Practices with exclusive or preferred referral arrangements from orthopedic and spine surgeons, pain management physicians, or occupational medicine groups command significant premiums.

How Illinois buyers put a number on how to value a physical therapy practice

This page is the valuation guide. It is not the sale-process playbook. Seller’s discretionary earnings (SDE) is the cash a full-time working owner can take after you normalize the books. Start with the tax return. Add owner pay and one-time costs. Subtract the wage you must pay to replace the owner.

PT buyers recast visits and therapist productivity after a market-rate clinical director. Pull the selling PT’s evaluation volume if they are leaving, and isolate any employer or IME contract that is personal. Medicare cap and modifier discipline belongs in the recast, not in a footnote. A 4x–7x EBITDA band assumes referrals survive the name on the door.

Planning band on this vertical: 4x–7x SDE. That is a range, not a quote. BizBuySell’s Q2 2026 Insight Report showed a 2.7× cash-flow multiple across all reported closed deals. Do not use that marketplace average as this shop’s appraisal.

A worked planning example (illustration)

Illustration only — not a quote for any Illinois shop. A physical therapy practice whose tax return shows $250,000 of net profit is not worth $250,000 × a rumor multiple.

Add back the owner’s $168,000 W-2 and payroll tax, $12,000 of discretionary benefits, $2,000 of accepted one-time cost, and $11,000 of personal expenses that a buyer will not run. Then subtract $28,000 of replacement labor if the owner still diagnoses, sells, or closes the books.

Adjusted SDE in this illustration is $415,000. At 5.50x, enterprise value is $2,282,500 before debt, working capital, holdback, and tax.

SDE line items buyers actually use

1. Reported net profit (tax return, not the marketing P&L)
2. + Interest expense
3. + Income taxes (not payroll, sales, or property tax)
4. + Depreciation and amortization
5. + Owner W-2, bonuses, and payroll taxes on the owner
6. + Discretionary owner benefits that a buyer will not keep (auto, personal travel, family on payroll with no role)
7. + Accepted one-time or non-recurring expenses
8. − Market-rate replacement labor for owner work that will not transfer
9. = Seller’s Discretionary Earnings (SDE)

What moves the multiple up or down

• Referral diversity beyond one surgeon
• Staying licensed PTs and a non-seller clinical lead
• Clean Medicare and commercial billing file
• Visit productivity a platform will not immediately cut
• Lease economics on a high-build-out clinic

What does not transfer with the price

IDFPR physical-therapist licenses are personal. Clinic ownership and use of “physical therapy” in the trade name are regulated. Medicare and commercial enrollments are change-of-ownership filings. Illinois direct-access rules still leave a referral-heavy book in many orthopedic corridors. The clinic’s IDFPR and payor numbers do not automatically follow the assets.

Diligence that changes the number

• Visits per therapist per day and cancellation/no-show rates
• Referral-source concentration (one surgeon vs a panel)
• Payer mix, Medicare share, and any audit history
• Licensed PT vs PTA mix and who is staying
• Lease, build-out, and equipment (tables, modalities, gym)
• Employer, cash-pay, or wellness add-ons that are real contracts

When you want the close calendar instead of the math, read how to sell. This page stays on value.

Documents to gather this week

1. Three years of signed business tax returns and matching P&Ls
2. Year-to-date P&L, balance sheet, and three months of bank statements
3. Current lease, amendments, and a plain-English remaining term
4. License and permit list, including who holds each card
5. Top-customer concentration (names redacted until an NDA)

A simple Illinois close calendar

Plan six to twelve months from cleanup to close on a prepared Main Street deal. Start CBS-1 and any Chicago or Cook notices at letter-of-intent, not the week of funding. Landlord consent often takes longer than the lender.

Related pages on this site

• Seller pricing page for this vertical
• How to sell
• Illinois business valuation
• Confidential consult

Educational only — not legal, tax, or a formal appraisal. Confirm bulk-sale notices, licenses, and tax allocation with counsel and a CPA.