Neil Saxon·December 29, 2022

How to Buy a Therapy Practice & Sell it for Millions |

Neil Saxon, a former Navy officer and Johnson & Johnson medical device sales rep, and his psychologist wife acquired a small Los Angeles mental health group practice in 2012 for $120k ($50k cash, $70k seller-financed) after finding the listing on BizBuySell over Thanksgiving. The business immediately proved to have been misrepresented — it was unprofitable, with several top-producing clinicians on 80-90% revenue splits that had never been disclosed. After a near-decision to list the practice on Craigslist for $50k in the first year, they reset clinician pay to 60% (triggering ~90% staff turnover), stabilized the business, and ground out slow growth for six years, reaching $2m in revenue. The critical unlock came when they engaged a tenant-only commercial real estate broker who secured $400k build-out allowances and 10 months of free rent from institutional landlords, combined with equipment leasing to finance furniture and technology — allowing them to open multiple large locations rapidly without capital constraints. Revenue jumped from $2m to roughly $6m in three years. They sold to private equity for low eight figures; the PE firm went public roughly six to twelve months later, giving Neil and his wife a second bite via stock. Neil's core lessons: don't skip quality of earnings, use equipment leases and tenant brokers to accelerate physical expansion, and insurance company relationships are the real demand engine in the group practice space.

Deal facts

purchase price: $120k
sde ebitda: claimed ~$120k SDE at acquisition (proved inaccurate)
revenue: $615k at acquisition; grew to ~$6m at exit
financing structure: $50k cash equity + $70k seller financing over 3 years
notes: Sold to private equity for low eight figures (including equity/stock); PE firm went public ~6-12 months post-acquisition giving a second bite. Exit revenue approximately $6m. Net margins 8-12% during growth phase.

Why this business

Neil found the listing on BizBuySell over Thanksgiving while working in medical device sales. His wife was already a psychologist, so a mental health group practice aligned with her skills. The 'worst case' thesis was: buy yourself a job making $120k. The upside was owning the insurance contracts and a platform to grow.

What's working

Insurance company relationships and group contracts created reliable, high-volume patient referral demand that could be 'dialed up' by calling insurance providers about underserved ZIP codes
Fixing the clinician pay split from 70-80-90% arrangements down to 60% restored margins and made profitable growth possible
Tenant-only commercial real estate broker (Hughes Marina) unlocked large build-out allowances (up to $400k) and 10 months of free rent from institutional landlords incentivized to fill Class A buildings
Equipment leasing (furniture, computers via companies like Balboa) allowed rapid multi-location expansion without large capital outlays, enabling the jump from $2m to $6m revenue in ~3 years
Wife as a practicing clinician provided a revenue-generating backstop during the early cash-flow crisis
Negotiated a forward-looking multiple at exit rather than backward-looking, capturing the growth trajectory

What's hard

Seller misrepresented SDE of $120k; business was unprofitable at acquisition with some clinicians on 80-90% splits undisclosed during due diligence
Seller became unreachable after closing; lawyer advised only option was full litigation to force rescission, which Neil declined
Early months required personal cash infusions of $1,400-$2,200 every two-week payroll cycle
Cutting clinician pay to 60% triggered ~90% staff turnover
Growth was very slow for the first six years ($615k to $2m), requiring grinding reinvestment before the financing-and-lease unlock
Running two businesses simultaneously (therapy practice and solar installation) was extremely stressful
Felt they sold too early; continued growth trajectory would have yielded more
Due diligence was only ~20 days; quality of earnings analysis was not performed

Notable quotes

really quickly we learned that this business doesn't make 120 000. this business doesn't make a dollar like this is bad like it was bad it was it was really bad

if you get into a business like this that's sort of I'll call it on the ropes it's nice to have the superpower of being able to do one of the tasks

what if we just let's just put on Craigslist let's put on Craigslist 50 Grand be done with it

if one of us gets low the other one has to stay up we can't go into that mindset together

we ended up having to put 50 Grand into the business through cash just from what I'd save bonus checks you know getting ready for this and then we did another the other 70 left over through seller financing and we paid that over three years