Buying a Behavioral Health Practice

Loan options

• SBA 7(a) Standard Loan

  Full practice acquisitions including goodwill, payer contracts, EHR systems, and working capital for credentialing transition costs — the most common SBA structure for behavioral health deals in the $1M–$5M purchase price range

• SBA 7(a) Small Loan

  Smaller solo or two-clinician practice acquisitions, partial buy-ins, or add-on acquisitions where a platform buyer is acquiring a single-location practice to bolt onto an existing group

• SBA 504 Loan

  Behavioral health acquisitions where the buyer is also purchasing the clinical office space or facility — less common in pure practice acquisitions but highly effective when real estate represents 30%+ of deal value

Eligibility

• The behavioral health practice must be a for-profit entity operating as an outpatient clinic, group practice, IOP, or psychiatric service provider — nonprofit mental health agencies are ineligible for SBA financing
• The buyer must inject a minimum of 10% equity (cash or seller note on full standby) at closing, with lenders often requiring 15–20% if owner-clinician key-person risk is elevated or payer mix is heavily Medicaid-concentrated
• The practice must have a documented history of positive cash flow sufficient to service the proposed debt, typically demonstrated through three years of tax returns and practice management system revenue reports showing consistent insurance collections
• The buyer must demonstrate relevant management, clinical operations, or healthcare business experience — prior ownership of a healthcare practice, clinical licensure, or an MBA with healthcare operations background all strengthen eligibility

Step by step

1. Identify and Letter-of-Intent a Qualified Behavioral Health TargetWeeks 1–6

   Begin by identifying practices with $1M–$5M in annual revenue, EBITDA margins of 15–25%, and at least five licensed clinicians on staff to reduce key-person risk.

2. Engage an SBA Lender with Healthcare Industry ExperienceWeeks 4–8

   Not all SBA lenders understand behavioral health. Seek lenders who have closed mental health or healthcare practice acquisitions and who understand MSO structures, insurance contract transferability, and clinician credentialing timelines.

3. Complete Behavioral Health-Specific Due DiligenceWeeks 6–14

   Behavioral health due diligence goes well beyond standard business acquisition review.

4. Structure the Deal for SBA Compliance and Healthcare Regulatory RequirementsWeeks 10–16

   Most behavioral health acquisitions in corporate practice of medicine states must be structured as asset purchases by a Management Services Organization entity, not a direct clinical practice purchase.

5. Close, Credential, and Execute the Patient Transition PlanWeeks 20–28 and ongoing post-close

   At closing, fund the SBA loan, execute all asset purchase documents, and begin the credentialing and payer enrollment process for the acquiring MSO entity immediately — do not wait until after closing to initiate credentialing, as this process takes 90–180 days per payer and is the single largest source of revenue disruption post-acquisition.

Other financing

• SBA 7(a) LoanPrime + 2.25%–2.75%, currently 10–11%

  The most common financing vehicle for behavioral health acquisitions under $5M. Lenders underwrite based on payer mix stability, clinician retention, and historical collections rather than hard assets.

  • + Long 10-year amortization reduces monthly debt service, critical given thin behavioral health margins of 15–25%
  • + SBA lenders experienced in healthcare can structure around MSO entities required in corporate practice of medicine states
  • − Approval timeline of 60–90 days can complicate closings when credentialing delays already pressure revenue
  • − Lenders heavily scrutinize owner-clinician revenue concentration; practices where owner bills 50%+ of collections face significant hurdles
• Seller Financing / Seller Note

  Sellers carry 10–20% of the purchase price as a subordinated note, often structured with a 2-year employment agreement ensuring clinical continuity and payer contract transferability during transition.

  • + Signals seller confidence in business continuity, which satisfies SBA lender requirements for a seller note in goodwill-heavy deals
  • + Defers full seller payout, creating incentive for seller to support credentialing transfers and patient retention post-closing
  • − Seller may resist note if personal financial needs require full cash-out at closing, limiting deal viability
  • − Default risk if payer audits, billing issues, or staff departures materially reduce post-close revenue below projections

Lender tips

• Seek out SBA Preferred Lender Program (PLP) lenders with a documented track record of closing mental health, behavioral health, or healthcare practice acquisitions — ask each lender directly how many behavioral health deals they have closed in the last 24 months and request references from buyers in similar transactions
• Prepare a credentialing transition memo as part of your loan package — proactively documenting how each clinician's insurance panel participation will be maintained or re-established post-closing signals to lenders that you understand the operational risk and have a mitigation plan, which meaningfully reduces perceived credit risk
• Request that your lender include a 6-month interest-only period or a 90-day payment deferral provision in your loan terms to bridge the credentialing transition period — some healthcare-experienced SBA lenders will accommodate this structure, preserving cash flow during the highest-risk window post-closing
• Bring a healthcare-specific CPA who can recast the seller's financials on a collections basis rather than accrual — behavioral health practices often have significant accounts receivable timing differences between service delivery and insurance payment, and lenders who do not understand this will understate true cash flow and undersize the loan

• Asset Purchase with MSO StructureRepresents approximately 55–65% of behavioral health deals in the lower middle market, particularly in states with active CPOM enforcement.

  The buyer acquires the non-clinical assets of the practice — including goodwill, contracts, equipment, EHR systems, and billing infrastructure — through a Management Services Organization entity that provides administrative services to a newly formed or acquired professional entity (PC or PLLC) owned by a licensed clinician.

  • + Complies with corporate practice of medicine laws by separating management from clinical ownership, protecting the buyer from regulatory exposure
  • + Allows non-clinician buyers including private equity platforms and strategic operators to participate in behavioral health economics without holding a clinical license
  • − Structural complexity increases legal and accounting costs, often adding $15,000–$40,000 to transaction expenses compared to a simple asset sale
  • − Payer contracts are typically non-transferable in an asset purchase, requiring re-credentialing that can delay revenue collection by 90–180 days post-close
• Stock Purchase with EarnoutAccounts for roughly 25–35% of behavioral health acquisitions in the lower middle market, most frequently used by platform buyers executing geographic roll-up strategies.

  The buyer acquires 100% of the equity in the existing professional corporation or PLLC, assuming all assets and liabilities.

  • + Eliminates re-credentialing delays because insurance contracts transfer with the entity, maintaining revenue continuity from day one post-closing
  • + Earnout provisions directly align seller incentives with post-closing retention of patients, clinicians, and referral sources — the three biggest value drivers in behavioral health
  • − Buyer assumes all pre-closing liabilities including undisclosed HIPAA violations, insurance audit exposure, and billing irregularities embedded in the acquired entity
  • − Earnout disputes are common when patient census or clinician headcount declines for reasons outside the seller's control, requiring detailed earnout definitions and audit rights
• SBA 7(a) Asset Acquisition with Seller Equity RolloverUsed in approximately 30–40% of lower middle market behavioral health acquisitions, most commonly in practices with revenue under $3M and an owner-clinician who plans to exit within 2 years.

  An SBA 7(a) loan finances 80–90% of the purchase price in an asset acquisition, with the seller rolling 10–20% of the transaction value back into the business as a subordinated equity stake or seller note that satisfies SBA injection requirements.

  • + SBA 7(a) financing provides up to $5 million in acquisition funding with 10-year amortization and competitive rates, significantly reducing the buyer's equity requirement compared to conventional financing
  • + Seller equity rollover or subordinated note aligns the seller's financial interest with a successful post-closing transition, motivating active cooperation during the critical 12–24 month integration period
  • − SBA lenders apply heightened scrutiny to behavioral health practices due to Medicaid concentration risk, key-person dependency, and HIPAA compliance history, making underwriting longer and more documentation-intensive than standard SBA deals
  • − Owner-clinician revenue concentration above 30–40% of total collections frequently triggers lender conditions or deal denial, requiring advance restructuring before approaching SBA financing

Negotiation tips

• Negotiate payer contract continuity protections before signing the LOI — confirm in writing which insurance panels will transfer, which require re-credentialing, and who bears the cost of any revenue gap during the credentialing transition period, as this can represent 3–6 months of collections at risk.
• Define earnout metrics in clinical operational terms that are directly measurable from the EHR and billing system — patient census counts, licensed clinician headcount, and payer-specific collection rates — rather than broad EBITDA targets that are vulnerable to post-closing accounting disagreements.
• Push for a clinician retention escrow funded at 5–10% of purchase price, held for 12 months post-close and released only if key therapists and psychiatrists remain on staff, giving the seller a direct financial incentive to actively support staff retention rather than passively hoping it happens.
• In any SBA-financed deal, address owner-clinician revenue concentration directly in the letter of intent by agreeing to a pre-closing transition plan that redistributes the seller's patient load to other staff clinicians over 6–12 months before close — SBA lenders will require this and starting early avoids last-minute deal risk.

Financial Performance & Payer Mix

• Request three years of payer-level revenue reports from the EHR and practice management system.critical

  Confirms whether revenue is diversified across commercial, Medicare, Medicaid, and private pay or dangerously concentrated.

• Obtain and review all current payer contracts, fee schedules, and reimbursement rates by CPT code.critical

  Identifies below-market reimbursement rates or payer contracts that may not survive an ownership change.

• Analyze historical claim denial rates, write-offs, and accounts receivable aging by payer.important

  High denial rates signal billing and coding errors that inflate gross revenue while suppressing actual collections.

• Request monthly revenue and session volume data for the trailing 24 months by clinician.critical

  Reveals revenue concentration in specific providers and identifies seasonal trends or patient census declines.

Credentialing & Insurance Panel Continuity

• Obtain credentialing files for every licensed clinician including CAQH profiles, NPI numbers, and panel enrollment letters.critical

  Gaps in credentialing documentation can cause billing interruptions lasting 90–180 days post-closing.

• Confirm transferability of payer contracts under an asset purchase or MSO structure with each major payer.critical

  Many payer contracts terminate or require re-enrollment upon change of ownership, halting reimbursement.

• Verify credentialing status and expiration dates for all state licenses, DEA registrations, and board certifications.critical

  Expired or lapsed credentials can disqualify clinicians from billing and trigger payer audits retroactively.

• Assess the timeline and cost to re-credential new clinicians hired post-acquisition with existing payer panels.important

  Re-credentialing can take 90–180 days, meaning new hires cannot bill during ramp-up without revenue loss.

Regulatory & Licensing Compliance

• Obtain a legal opinion on the state's corporate practice of medicine doctrine and the practice's current entity structure.critical

  Many states prohibit non-clinicians from owning behavioral health practices without an MSO structure.

• Review state behavioral health facility licensure, outpatient clinic certifications, and any IOP or substance use disorder program permits.critical

  Facility licenses are often non-transferable and require reapplication, causing operational delays post-closing.

• Review telehealth service delivery compliance including state licensure for out-of-state patients and platform BAA coverage.important

  Post-pandemic telehealth growth added compliance risk if clinicians treat patients across unlicensed state lines.

• Confirm no active or historical Medicaid or Medicare audits, OIG exclusions, or False Claims Act investigations.critical

  Government payer audits can result in recoupment demands, exclusion, or criminal liability transferring with acquisition.

Key-Person Risk & Clinical Staff Retention

• Map all revenue by clinician and calculate the percentage attributable to the selling owner-clinician.critical

  Owner providing more than 50% of billable services creates catastrophic revenue risk if they exit post-closing.

• Review employment agreements, independent contractor agreements, and non-solicitation clauses for all clinical staff.critical

  Without non-solicitation agreements, departing clinicians can legally recruit patients and referral sources away.

• Conduct confidential one-on-one retention conversations with top three revenue-generating clinicians during late diligence.important

  Verbal confirmation of retention intent from key clinicians de-risks post-closing revenue continuity significantly.

• Review referral source documentation including hospital relationships, EAP contracts, school partnerships, and physician referrals.important

  Referral relationships tied to the owner personally — not the practice brand — will not survive ownership transfer.

Behavioral Health Practice-specific checks

• Confirm no open licensing board complaints, insurance fraud investigations, or OIG exclusion list entries for any clinician on staff before closing.
• Verify the practice holds a valid facility license or outpatient clinic certification if required by state, separate from individual clinician licensure.
• Review whether the practice operates an IOP or PHP level of care, which carries additional accreditation, staffing ratio, and billing compliance requirements.
• Assess telehealth revenue percentage and confirm all telehealth sessions are delivered in compliance with both originating site and distant site state regulations.
• Evaluate payor contract assignment clauses — many commercial and government payer contracts require advance written notice and approval before assignment to a new owner.

Red flags

• Owner-clinician generates more than 50% of total collections with no documented patient transition or employment agreement post-close.
• Active or unresolved Medicaid or Medicare audit, OIG exclusion, or licensing board complaint against any provider in the practice.
• Payer contracts contain explicit change-of-ownership termination clauses with no re-enrollment guarantee from major commercial payers.
• No MSO or professional entity structure in a corporate practice of medicine state, requiring full restructuring to complete legal transfer.
• More than 40% of total revenue concentrated in a single government payer with pending reimbursement rate reductions.

What the LOI covers

• Seller's Employment and Transition Agreement

  Defines the owner-clinician's post-closing role, duration, compensation, and clinical obligations.

• Exclusivity and No-Shop

  Grants the buyer an exclusive period to complete due diligence and negotiate a definitive purchase agreement, during which the seller agrees not to solicit or entertain offers from other buyers.

Terms to negotiate

• Payer Contract Transferability and Credentialing Gap Coverage

  Behavioral health payer contracts — especially with commercial insurers like Aetna, Cigna, BlueCross, and United — are frequently non-assignable and require the buying entity to re-credential as a new provider.

• Owner-Clinician Earnout Metrics and Control Rights

  When a portion of the purchase price is deferred as an earnout tied to patient census or clinician retention, the parties must negotiate who controls the variables that determine the payout.

• MSO Management Fee Structure and Clinical Entity Independence

  In corporate practice of medicine states, the MSO structure requires the clinical professional entity to be legally independent and owned by a licensed clinician, with the MSO providing only non-clinical services for a management fee.

• Clinician Non-Solicitation and Key Employee Retention Commitments

  The departure of 2–3 licensed therapists or a psychiatrist following an acquisition announcement can immediately collapse the revenue thesis.

Target profile

• Minimum 5–10 licensed clinicians on staff (LCSWs, psychologists, LPCs, psychiatrists, NPs) with no single provider accounting for more than 25–30% of total collections
• Active credentialing and insurance panel participation with at least three major commercial payers plus Medicare or Medicaid, with contracts transferable or re-credentialable post-closing
• Diversified service lines spanning at least two of: individual outpatient therapy, group therapy, psychiatric medication management, or intensive outpatient programming (IOP)
• Clean licensure history with no active HIPAA violations, licensing board complaints, or ongoing insurance audits, and a HIPAA-compliant EHR system with documented billing procedures

Platform and add-on criteria

• Established Multi-Clinician GroupPlatform

  Minimum 8–12 licensed clinicians with no single provider exceeding 25% of collections, ensuring revenue durability and clinical capacity to absorb add-on patients and staff.

• Diversified Insurance ContractsPlatform

  Active credentialing with major commercial payers plus Medicare and Medicaid, with less than 40% Medicaid concentration to limit reimbursement rate exposure.

• Scalable MSO InfrastructurePlatform

  Existing Management Services Organization structure or willingness to adopt one, enabling corporate practice of medicine compliance and clean separation of clinical and management entities.

• EBITDA of $400K–$1M+Platform

  Proven profitability at 15–25% EBITDA margins with clean, reviewed financials and a centralized EHR and billing system that supports multi-site expansion.

Acquisition sequence

1. Establish the MSO Platform Entity and Legal InfrastructureCPOM-compliant MSO structure, healthcare legal counsel, EHR and billing infrastructure selection

   Before acquiring the first practice, build the Management Services Organization (MSO) that will serve as the administrative backbone of the platform.

2. Acquire the Anchor Practice — Geographic Density and Service Line BreadthAnchor market selection, SBA 7(a) financing structure, seller transition agreement, centralized billing integration

   The anchor acquisition sets the template for the entire platform.

3. Centralize Revenue Cycle Management and Credentialing Across the PlatformRCM centralization, denial rate reduction, credentialing compliance, DSO improvement

   By the time the platform has 3–4 integrated practices, revenue cycle management (RCM) and credentialing should be fully centralized at the MSO level.

4. Scale Clinical Capacity Through Organic Hiring and Telehealth ExpansionClinical recruiter hiring, therapist retention incentives, telehealth infrastructure build-out, organic revenue growth

   Roll-up value creation is not just multiple arbitrage — organic growth between acquisitions drives platform EBITDA and justifies the premium exit multiple.

Value creation levers

• MSO Administrative Leverage Reduces Per-Practice Overhead

  Each acquired practice currently runs its own billing staff, credentialing coordinator, HR function, and compliance program — duplicated overhead that destroys margin at the individual practice level.

• Revenue Cycle Optimization Across Unified Billing Operations

  Behavioral health billing is complex and chronically mismanaged at owner-operated practices.

• Cross-Referral Volume Between Therapy and Psychiatry Service Lines

  Most acquired practices operate in silos — a therapy-only practice cannot serve patients who also need psychiatric medication management, and vice versa.

• Payer Contract Renegotiation at Scale

  Individual practices with 5–10 clinicians have virtually no leverage with commercial payers. A platform billing $10M–$20M annually in a concentrated geographic market becomes a credible negotiating counterparty.

Day one

• Meet individually with all licensed clinicians to confirm employment or contractor agreements, address concerns, and communicate the new ownership's commitment to clinical culture and patient care continuity.
• Notify your billing team and credentialing specialist to begin payer contract assignment notifications, as most commercial insurers require 30–90 days advance notice of ownership changes.
• Secure access to the EHR system and verify all active patient records, treatment plans, and billing queues are intact and accessible under the new ownership entity.
• Confirm HIPAA Business Associate Agreements are updated or re-executed with all vendors, clearinghouses, and technology partners reflecting the new legal entity post-closing.
• Communicate a brief, professionally worded letter to referring physicians, schools, and EAP partners introducing the new ownership and affirming continuity of clinical services and intake processes.

Stabilization (Days 1–30)

• Conduct a credentialing audit on all clinicians to identify any lapsed licenses, expiring DEA registrations, or pending payer enrollments requiring immediate action.
• Review the prior 90 days of claims data in the EHR to identify denial trends, coding errors, or underbilled services that are suppressing collections under current ownership.
• Implement a weekly all-hands clinical meeting to surface operational concerns early, reinforce cultural alignment, and demonstrate leadership accessibility to the clinical team.

Optimization (Days 31–90)

• Deploy or optimize a group practice management layer—scheduling, intake, and billing—to reduce owner-clinician administrative burden and free capacity for patient-facing hours.
• Conduct a payer mix review to assess commercial versus Medicaid reimbursement ratios and model the revenue impact of adding or prioritizing higher-reimbursing commercial panels.
• Begin structured transition of key referral relationships from the seller to new clinical or operational leadership through joint introductory meetings with top referral sources.

Growth (Days 91–180)

• Launch a targeted clinician recruiting effort leveraging the practice's insurance panel credentials and established brand as a competitive hiring advantage in a tight labor market.
• Evaluate feasibility of adding an IOP track or psychiatric medication management service if not currently offered, given strong cross-referral and revenue potential within existing patient population.
• Build a quarterly business review cadence with clinical leadership to align operational KPIs with growth targets and surface emerging staffing or payer issues before they impact revenue.

Pitfalls

• Credentialing Gaps That Freeze Billing

  Failing to notify payers of the ownership change before closing can suspend credentialing and halt reimbursement for weeks or months, creating serious cash flow disruption in the first 90 days.

• Losing Clinicians in the First 60 Days

  Therapists and psychiatrists have high market demand and will exit quickly if they feel uncertain about new ownership. Retention agreements and cultural transparency from Day 1 are non-negotiable.

• Underestimating Corporate Practice of Medicine Complexity

  Acquiring a practice in a CPOM state without a properly structured MSO can create unlicensed practice violations. Engage healthcare counsel before closing to ensure the legal entity structure is compliant.

• Ignoring Owner-Clinician Key-Person Riskcritical

  When the selling owner provides 40–60% of billable services, their departure post-closing can trigger immediate patient attrition and referral source collapse, decimating the revenue base you underwrote.

• Assuming Payer Contracts Transfer Automaticallycritical

  Most commercial insurance panel contracts are non-assignable. An asset purchase without confirming contract transferability can leave your new practice credentialing from scratch — a 6–18 month revenue gap.

• Overlooking Corporate Practice of Medicine Lawscritical

  Many states prohibit non-clinicians from owning a behavioral health practice directly. Buying equity without an MSO structure in a CPOM state can render your ownership arrangement illegal and void.

• Underestimating Clinician Turnover Post-Closingmajor

  Therapists and psychiatrists often have personal loyalty to the founding owner. Without proactive retention agreements, a significant portion of clinical staff may depart within 90 days of announcement.

• Accepting Unverified Cash or Undocumented Revenuemajor

  Some behavioral health practices mix personal expenses, accept unreported cash payments, or lack clean EHR billing records. Revenue that cannot be tied to insurance remittances is worthless in a valuation.

• Skipping a Payer Mix Concentration Analysismajor

  Heavy Medicaid concentration — above 50% of collections — exposes buyers to catastrophic revenue loss from a single reimbursement rate cut or managed care contract termination. How to avoid it: Map every payer by revenue percentage.

Warning signs

• Owner-clinician generates more than 40% of total practice collections with no documented succession plan
• More than two payer contracts are oral arrangements or month-to-month without written agreements
• Outstanding licensing board complaints, HIPAA violation notices, or active insurance audits disclosed in diligence
• Clinician staff have no written employment or IC agreements and no non-solicitation provisions in place
• Financial statements show revenue growth but claim denial rates exceed 15% or collections lag billings by more than 90 days

Phase 1: Financial Housekeeping (Months 1–6)

• Separate personal and business finances completelyhigh

  Pull all personal expenses — personal vehicle, home office, insurance premiums, family payroll — off the practice P&L and recast your financials to show true business performance.

• Compile three years of reviewed or audited financial statementshigh

  Tax returns alone are insufficient for most buyers and SBA lenders underwriting a behavioral health acquisition. Engage a CPA to prepare reviewed financials for the last three fiscal years.

• Document and normalize owner compensationhigh

  Prepare a clear owner compensation summary including W-2 salary, distributions, personal benefits, and any owner-provided clinical hours billed through the practice.

Phase 2: Legal and Corporate Structure (Months 3–9)

• Establish or formalize an MSO structure if in a corporate practice of medicine statehigh

  Many states prohibit corporations from employing licensed clinicians or owning clinical practices outright — including California, Texas, and New York.

• Negotiate and execute employment or contractor agreements with all clinicianshigh

  Buyers acquiring a behavioral health practice are purchasing a revenue-generating team of licensed providers. Without written agreements in place, every therapist, psychologist, or psychiatrist on staff can walk on day one post-close.

• Review and clean up your corporate formation documentsmedium

  Locate your articles of incorporation or organization, operating agreement, and any shareholder or membership interest agreements.

Phase 3: Clinical Operations and Compliance (Months 6–12)

• Implement and document HIPAA-compliant policies and Business Associate Agreementshigh

  Conduct a formal HIPAA Security Risk Assessment covering your EHR system, billing software, telehealth platform, and any third-party vendors with access to protected health information.

• Centralize and organize all payer contracts and credentialing fileshigh

  Create a digital data room folder containing every executed payer contract, fee schedule addendum, and credentialing file for each clinician.

• Document clinical workflows, intake processes, and billing proceduresmedium

  Create written standard operating procedures for your patient intake process, clinical documentation standards, billing submission workflow, and collections process.

Phase 4: Pre-Market Positioning (Months 10–18)

• Create an organizational chart demonstrating practice independence from the ownerhigh

  Prepare a formal org chart showing clinical leadership (clinical director or lead therapist), administrative management (practice manager or office manager), billing oversight, and any supervisory relationships — with the owner positioned as one clinician among many rather than the hub of all operations.

• Prepare a Confidential Information Memorandum (CIM) tailored for behavioral health buyershigh

  Work with your M&A advisor to prepare a 15–25 page CIM that tells the story of your practice: founding history, service lines, payer mix, clinician team, referral network, growth trajectory, and expansion opportunities.

• Identify your ideal buyer profile before going to marketmedium

  Determine whether you are prioritizing maximum upfront cash (SBA-financed individual buyer), equity rollover with upside in a PE platform (roll-up acquisition with earnout), or a values-aligned buyer who will preserve your clinical culture and staff.

Quick wins before a sale

• Pull your most recent three years of insurance remittance reports and reconcile them to your tax returns — identifying any revenue discrepancies now will prevent a deal-killing surprise during due diligence
• Send non-solicitation agreements to your top three to five clinicians immediately — even simple, attorney-reviewed agreements dramatically reduce buyer concerns about post-close staff attrition
• Run a HIPAA Security Risk Assessment this month using a free HHS-recommended template and sign any missing Business Associate Agreements with your EHR vendor and billing company
• Call your malpractice carrier and state licensing board to confirm there are no open claims or complaints — if there are, engage healthcare legal counsel before approaching any buyers

Questions to ask a broker

• How many behavioral health or mental health practice transactions have you closed in the last three years, and what were the typical revenue sizes?

  Behavioral health deals require payer contract knowledge and MSO structuring expertise that generalist brokers lack, making closed deal history the most reliable qualification indicator.

• How do you handle corporate practice of medicine compliance and MSO structuring during the sale process in states where it applies?

  Failure to structure the transaction correctly under CPOM laws can void the deal or expose both parties to regulatory penalties post-closing.

• What is your process for maintaining clinician and patient confidentiality during the marketing phase of a behavioral health practice sale?

  Staff departures or patient attrition triggered by premature disclosure of a sale can materially destroy practice value before a transaction closes.

Broker red flags

• Broker has no closed behavioral health or healthcare transactions and cannot name a single deal involving payer credentialing or MSO structure.
• Broker suggests listing the practice publicly on general business-for-sale marketplaces without a confidentiality protocol, risking staff and patient disruption.
• Broker cannot explain the difference between an asset purchase and stock purchase in the context of insurance contract transferability and credentialing continuity.