If you're a physical therapy practice interested in undertaking a partnership, you should know the difference between a mergers and acquisitions (M&A) partnership and a general partnership.
Both are forms of partnership in business, but one is more formal than the other. Mergers and acquisitions is the more formal of the two and is considered a type of financial transaction. During an M&A, ownership of one company or its assets is merged into another, so that both parties co-own the company. This type of partnership can be an important steppingstone for both parties to expand and benefit from.
A general partnership is the less formal version of an M&A and does not require a financial transaction to take place. Each of the partners receives an agreed-upon percentage of the business. In essence, a new business is created through a partnership, and the strengths of each partner are merged to form a new entity.
Each of these types of partnerships has several advantages and disadvantages. To know which one may be the right kind of partnership for your physical therapy practice, read more about the benefits of mergers and acquisitions versus general partnerships below.
What are the benefits of mergers and acquisitions for a physical therapy practice?
- There is opportunity to diversify products or services ” One company can take on another already successful company to share earnings and diversify its products or services. In some cases, certain companies use M&As to keep their competition at bay.
- It can allow growth to occur for both parties ” M&As allow for both companies to expand their products or services and, as a result, their market too. Jointly, these companies can reach a larger audience of customers. For example, if a medical device company agrees to mergers and acquisitions with a physical therapy practice, then both companies can work together to reach a larger audience.
What are the benefits of a partnership?
- It's easy ” A general partnership requires less paperwork, due to this option being more informal than M&As. They can be completed quickly and cost-effectively.
- It can be dissolved easier ” For those with general partnerships, in the event that both parties wanted to dissolve their partnership, this could be done quickly and easily, which can't necessarily be said of M&As. If you're a physical therapy practice looking for ways to expand your growth but you're not quite ready to commit, this could be a better option than mergers and acquisitions.
Alliance PTP can help you make informed business decisions
At Alliance Physical Therapy Partners, we know that partnership means creating something that is larger than the sum of its parts. We're proud to bring together physical therapy clinics around the country to help people get the high-quality treatment they're looking for. Want to learn more about joining Alliance PTP's growing list of partners? Whether your physical therapy practice needs fit mergers and acquisitions or a general partnership, you can read more on our page for practice owners here.
Contact our team today for more information about how we can help your practice or to find out how you can join our partnership in care.