Professional Insights

Can Your Agency Still Dance On Its Own? Or Is It Time to Find a Buyer?

02/01/2022

How do you know the time is right to sell your home health or private pay home care agency? These are the questions we ask to help owners and their teams approach the process with confidence.

1. Is your home health or private pay home care agency in ship-shape to sell?

Once you’ve decided you want to sell, the next step is making sure you have everything in place to ensure your agency will attract prospective buyers. Are your current financial statements accurate? Are collections caught up or in good condition? Are your quality and compliance procedures and documentation in excellent condition? Are your revenue and referral sources improving? Does your revenue come from a diverse range of payers? Do you offer good contract pricing with managed Medicare payers?

2. What are your expectations for price? 

While our team has helped agencies determine the right pricing model, we also know that prices are dependent on very thorough due diligence and negotiation. We have seen that agencies that are Medicare/Medicaid certified have listed at 50-60% of annual revenue. Non-medical agencies are often listed at 40-60% but vary widely depending on their earnings before interest, taxes, depreciation and amortization (EBITDA).  Multiples of EBITDA are approximately 5X.  

3. What kind of legacy do you want to leave behind?

Your staff and management team are special to you. You would like to make sure they ‘land’ in a good place. Your reputation and care for patients is something you worked hard to achieve. It’s something you would like the buyer to sustain. You want to marry up your agency to someone you will be happy to partner with. If you sell your name, you want to make sure that it will continue to be well regarded.

4. Is this the best time to sell?   

Currently in some markets, hospitals are trying to secure the home health sector. This may affect pricing as hospital referrals to your agency may decline. If larger agencies compete to buy your agency, pricing could become favorable. We believe that the market timing is right to consider a sale if that is part of your exit plan.

5. What organizations are looking to buy home care operations?  

We see non-medical home care agencies desiring to add licensed medical services to support their patients. We see hospitals that want to keep their patients within their continuum of services. We see licensed medical agencies interested in diversifying to include non-medical services. Some agencies want to add Hospice to their services.  Other agencies want to add brand new services.  The market is active!   

6. How can an independent consultant support the sale process?

Connecting with prospective buyers is one part of the equation. But preparing for the sale is critical. The Corcoran Consulting Group team works with agencies that want to sell throughout the entire process. We will give you our opinion on the value of your company. We offer certified valuations if applicable. Your personal goals will drive us during the engagement. We’ll put our market knowledge and contacts with potential buyers to work for you.  We’ll work closely with you to create a comprehensive profile for buyers that highlights your agency’s strengths and weaknesses, your staff, your specialties, your history, and your referral sources.  

Ready to start the process of positioning your home health or private pay home care business for sale?  Give us a ring at (203) 691-1319 or email us at info@corcoranconsultants.com.

Rich Corcoran, CPA, CHCE, CVA, CGMA, is Founder and CEO of Corcoran Consulting Group. 
Kathy Trier, MBA, is Mergers/Acquisition & Leadership Consultant at Corcoran Consulting Group.