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Buying or selling a behavioral health practice? Here are some questions to consider.


When the owner of a growing behavioral health practice contemplates selling, there are many items to consider. This journey can be smoother when you have an experienced partner at your side.

Investors looking at behavioral health organizations are looking for practices that are conceptually sound, and, as the market dictates, have great potential for growth. The organization’s purpose has to demonstrate a current and future need in the market, and a willingness of management to accept direction and make necessary changes to achieve the investors’ objectives.

So, how does a behavioral health owner-clinician assess their organization for investor readiness and attractiveness? There are many questions firms look to answer when making an investment in a behavioral health practice.

Strategic growth plan

When looking at a potential business investment, M&A firms ask a lot of questions around sustainability and steady growth over time.

  • Has the organization shown growth since inception?
  • Does the organization have a solid, well-formed business plan with a pro forma? Is the business poised for substantial growth?
  • Is management committed and passionate about the service being delivered and the overall concept?
  • What type of internal reporting and data does management use to guide the business decisions? 
  • What types of external information is reviewed to keep a tab on competitive and market forces? 
  • Do you have an idea of how your profits and other benchmarks compare to those of your peers?


Another area to focus on is the staffing of the practice. Are the right people in key roles, and is the organization well run by people who understand the business and have the skills to turn the organization into a viable and flourishing entity? Other questions include:

  • Have the skill gaps been identified?
  • What is needed now and will be needed down the road? Is it sales? Finance? IT? Good day-to-day managers?
  • Is there a Chief Medical Officer to oversee the clinical aspects of the business including proper clinical documentation?
  • Are there marketing and promotion staff?

Data integrity and security

Data integrity and security is another area that investors will put under high scrutiny, for obvious reasons.

  • How are you organizing and gathering data? Are you generating data proactively?
  • Can there be real-time review of key performance indicators?
  • Is there an electronic medical record or is this a paper-only organization? If the latter, what system or software is being used to generate reports?
  • Are reports being generated on a regular basis or only as requested?
  • What reporting is readily available to the managers and administrators so they can keep a finger on the financial health of the organization? Reports may include cash on hand, productivity, outstanding debt, accounts receivable and accounts payable, and other key financial metrics.
  • How long will it be until the organization turns a profit?


Financial success factors are extremely important to investors. Are these factors nestled into and functioning hand-in-hand with the operational functions? These include consideration of the balance of business expenses and revenues generated. 

  • If contracting with payors, are the contractual terms and payments adequate to cover the costs and generate a profit? 
  • Are there non-essential areas that may be trimmed back? Are the clinical services being coded correctly for submission to insurers? 
  • How are service fees (including co-pays) being collected, and is there is a collections function for overdue accounts? 

Compliance and regulation

The organization should have a timeline to check off all regulatory requirements. This includes clinician licensing and credentialing with the payors, scope of practice limitations within the state for non-physician staff, policy and procedures for the organization, privacy and security regulations including HIPAA, human resources policies and procedures, and a compliance plan that will grow as the organization grows and expands.

When working on mergers and acquisitions or going through the due diligence process, it helps to have an experienced team at your side. Our audit, compliance, due diligence, consulting, and business valuation experience with healthcare businesses makes us uniquely qualified to help you navigate a merger or acquisition. BerryDunn is here to make you successful as you move forward in raising funds for your business, and can partner with you to create a compelling story attractive to investors.

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