Financing an occupational therapy practice acquisition

An occupational therapy practice is an unusually asset-light business to finance. There is no real estate, no significant inventory and comparatively modest equipment, which means most of the purchase price a lender is being asked to finance is goodwill built on referral relationships — and that changes the shape of a financing package compared with a business that has real collateral to lend against.

Why lenders discount referral-based goodwill

Insurer and case-manager referral relationships are personal and relationship-based, not contractual, which means they can redirect to a different provider for reasons entirely outside the new owner’s control. A lender underwriting an acquisition loan reads that as exactly what it is — collateral value that is real but genuinely at risk of disappearing shortly after closing — and most lenders will not extend the same coverage against this kind of goodwill that they would against a business with recurring contracted revenue or hard assets. Expect a lender to lend conservatively against the practice’s cash flow rather than heavily against its stated goodwill value, and expect to be asked how the purchase price was arrived at, since a price built mainly around a goodwill multiple is a harder story to underwrite than one anchored in verified, diversified cash flow.

What’s actually lendable

Treatment equipment and any home or workplace assessment tools are among the few tangible assets in the practice, and they can usually be financed through conventional equipment financing or leasing, separate from the broader acquisition loan. Accounts receivable from workers’ compensation boards and insurers has some lending value too, though a lender will look closely at payer mix and aging before extending much against it, since receivables from a single concentrated payer carry more risk than a diversified book.

Where a vendor take-back usually sits

Given how much of the purchase price is goodwill a conventional lender will not fully finance, a vendor take-back loan — where the seller finances part of the price and is repaid over time out of the practice’s future earnings — is common in this sub-sector, and it does more than fill a financing gap. It also aligns the seller’s incentives with the buyer’s during the period when referral relationships are most at risk of redirecting, since the seller is only fully paid if the practice keeps performing. Buyers should expect a vendor take-back to be part of a realistic financing structure here, not a fallback.

What the lender will want to see

A diversified caseload across payer types reduces the redirection risk a lender is underwriting against, so be ready to show that breakdown clearly rather than a single revenue total. The number of treating occupational therapists relative to the owner’s own caseload matters too — a lender views a practice that depends entirely on the departing owner’s personal relationships as materially riskier than one with an established multi-therapist structure that can plausibly continue producing without them.

How the lender reads who’s buying

The financing conversation looks different depending on who is buying. An individual occupational therapist needs to demonstrate both their own clinical production capacity and, often, personal registration in the province, alongside standard acquisition financing options. A multi-disciplinary rehabilitation group buying the practice can usually draw on existing lender relationships and platform financials, changing the underwriting entirely. An insurance-services or case-management company vertically integrating may not need conventional acquisition financing at all, which can make it a faster-moving buyer to compete against in a sale process.

How the purchase structure changes what can be financed

Whether the deal is structured as an asset purchase or a share purchase changes what a lender can actually lend against, and it is worth understanding before you negotiate the structure rather than after. In an asset purchase, a lender can generally identify and lend against specific tangible assets being acquired, such as treatment equipment, more cleanly than in a share purchase, where the lender is financing the acquisition of an entire corporate entity, including whatever liabilities travel with it. A share purchase can also carry tax advantages for the seller that make them more willing to negotiate on price or accept a vendor take-back, so the structure that is best for financing is not always the structure the seller prefers — this trade-off is worth working through with your accountant and lawyer before you settle on an offer. Government-backed programs such as the Canada Small Business Financing Program can support the tangible-asset portion of an acquisition, subject to program eligibility rules, while a BDC business-purchase loan is a common route lenders use to finance the broader transaction; neither is a substitute for confirming your own eligibility and the current program terms directly.