What multiple do therapy practices sell for?

Most answers to this question are either uselessly vague or quietly wrong. The vague ones give you a range so wide it tells you nothing. The wrong ones quote a multiple of revenue, which is the fastest way to arrive at a number no buyer will pay.

Here is the direct answer, and then why the spread is as wide as it is.

The short answer

Behavioral health practices trade on a multiple of seller’s discretionary earnings, not revenue. Across the market that multiple runs from roughly 1.2× to 3.4×, and where you land inside it depends less on size than on one question: does the practice run without you?

Published market data supports the middle of that band — one valuation firm puts counseling-center SDE multiples at 1.94× to 3.14×. The range below runs wider at both ends because it separates practice structures rather than averaging them, and structure is what actually moves the number.

The multiples, by size and structure

| SDE | Solo, owner-dependent | Group with associates | Group with clinical director | |---|---|---|---| | Under $150K | 1.2× | 1.6× | 2.0× | | $150K – $400K | 1.6× | 2.1× | 2.5× | | $400K – $1M | 2.0× | 2.6× | 3.0× | | Over $1M | 2.2× | 2.9× | 3.4× |

Read that table across rather than down. At every size, moving from owner-dependent to a practice with a clinical director who is not the owner is worth roughly 0.8× to 1.2× of additional multiple — on $400,000 of SDE, that is somewhere between three and five hundred thousand dollars, for the same earnings.

Nothing else on this page moves the number that much.

Above about $1M you are in a different conversation

Larger practices get quoted on EBITDA rather than SDE, because the buyer is a platform that will employ a manager rather than an owner-operator who will run it themselves:

| EBITDA | Solo | Associates | Clinical director | |---|---|---|---| | Under $250K | 3.0× | 3.8× | 4.5× | | $250K – $750K | 3.5× | 4.5× | 5.2× | | Over $750K | 4.0× | 5.0× | 6.0× |

These look far more generous and are not. EBITDA charges a market-rate manager’s salary against earnings before the multiple is applied, so the bigger multiple is attached to a smaller number. A buyer quoting “five times” may be offering less than one quoting “three times” — always ask what is being multiplied. The arithmetic is worked through in SDE vs EBITDA.

Why revenue multiples mislead

You will see therapy practices described as selling for “0.5× to 2.5× revenue.” That heuristic is common, and following it will cost you.

Revenue says nothing about what the business actually produces for an owner. Two practices billing $1.2 million — one keeping $300,000 after everything, the other keeping $90,000 because the owner overpays clinicians and carries an expensive lease — are not worth remotely the same, and no buyer treats them as though they are.

Worse, revenue multiples hide the adjustment that matters most. If you still carry a caseload, a buyer subtracts the cost of replacing your clinical production before applying any multiple — roughly 55 cents on every dollar you personally collect, fully burdened. Collect $240,000 yourself and that is about $132,000 out of earnings, or close to $400,000 off your valuation at 3×. A revenue multiple cannot see that line at all.

Use revenue for one thing only: a sanity check that your earnings figure is plausible. Never as the basis.

What moves you within the range

Size and structure set the band. Thirteen further factors decide where in it you land, and they compound:

Owner dependency is the heaviest. Under about ten percent of revenue produced personally and you are demonstrably a business; over half and what is being sold is a caseload that may not transfer.

Whether payer contracts transfer. Held by the entity under a group NPI they can move with the practice. Following individual clinicians, the buyer re-credentials everyone — months during which the work happens and the payment does not, and they will price that gap conservatively.

Clinician tenure and concentration. Eight clinicians averaging five years is a different asset from eight averaging fourteen months, at identical revenue. If one clinician produces a third of revenue, that is a second key-person risk sitting behind the first.

Documentation that would survive a payer audit. Not clinical quality — recoupment exposure, which transfers to the buyer and which diligence exists to find.

Licensure and accreditation. A state certificate of approval, CCBHC status, CARF or Joint Commission — anything a buyer cannot quickly obtain themselves is worth real money, because acquiring you is faster than applying.

What buyers look for works through all of them.

What the multiple does not tell you

A multiple produces a headline price. It is not what lands in your account.

Deal structure moves the real number as much as the multiple does: cash at close versus escrow held back, seller notes, earnouts tied to performance you may no longer control, and how long you are required to keep working. A higher number with a long earnout can be worth less than a lower all-cash offer.

And for a licensed practice, structure is often not a free choice — state authorisations and payer contracts frequently attach to the entity rather than its assets, which can force a sale of the company itself and change your tax position substantially. See asset sale vs stock sale.

Working out your own

The calculator applies these exact tables to your practice — your SDE including the replacement adjustment, the multiple for your size and structure, and the thirteen factors that move it. It returns a range rather than a single figure, with the reasons the range is as wide as it is.

Free, about four minutes, no account.