Financial Tools
M & A Straight Talk with Jane: Financial losses and selling your agency
10/23/2025
This Month’s Question
“Our agency has experienced some financial losses in recent years—how will this affect our ability to sell in the near future?”
Here’s the Straight Talk
You're not alone. I’ve spoken with many agency owners who’ve taken financial hits over the last few years—COVID disruptions, staffing shortages, reimbursement cuts—it’s been a tough run.
Good News? Having losses doesn’t mean you can’t sell. It does mean you’ll need to approach things a little differently and tell the full story behind the numbers. Let’s break it down.
Buyers Want the Full Story
The right buyer will look beyond your profit and loss statement. They want to understand what happened, how you've responded, and whether your business is built to bounce back. If you’ve got strong referral sources, solid operations, and a history of quality care, there’s still real value there.
A Comeback Story Can Be Valuable
If your business has recently stabilized or is showing signs of recovery, buyers may view this as a chance to acquire at a more favorable valuation and unlock future value through operational improvements. We often work with clients to develop a compelling narrative supported by data—explaining not only why the losses occurred but what’s changed and what’s possible moving forward.
There are Buyers for Agencies Like Yours
Not every buyer is looking for a perfectly polished agency. There are investors who specialize in helping underperforming businesses reach their potential. If you’re in a desirable market, have good leadership in place, or offer niche services — there’s a buyer out there who may be interested.
Preparation and Positioning is Key
Even if a sale is a year or two away, this is the time to get your business ready to maximize its value: Clean up your financials, document improvements, identify hidden value, and be transparent about challenges and mitigations. A well-prepared package can build confidence with buyers, even when the numbers aren't perfect.
Need help with that? Feel free to email me and we can discuss your situation. jp@corcoranconsultants.com
Five Key Factors Investors Will Evaluate
1. Have things turned around?
Are you seeing stable or improving trends—like higher census, better margins, or lower expenses?
2. What caused the losses?
Losses may be acceptable if they were due to:
- One-time write-offs (e.g., bad debt, legal settlements)
- Strategic investments (e.g., expanding services, EMR systems)
- Temporary regulatory changes (e.g., pandemic-related costs)
However, recurring or operational losses (poor billing practices, payer mix, or chronic mismanagement) would be a red flag.
3. How are things looking now?
Buyers will check cash flow, A/R health, staff retention, and other signs of financial stability, like healthy EBITDA margins (often 10%-20% is attractive in home-based care).
4. Are there compliance concerns?
Clean audits, survey results, and low legal risks make a big difference.
5. Is there strategic value?
Your agency might be just what a buyer needs geographically or clinically—even if you’ve had a rough couple of years.
The Big Question: Will It Affect Valuation?
Probably. Prior-year losses can pull down your price, especially if the buyer uses a weighted average of the past 2-3 years’ EBITDA. However, valuation can be influenced by seller’s willingness to share in the risk and reward. Certain deal structures offering earn-outs, rollover equity, or seller notes can help bridge the gap.
Positive Trends That Make Buyers Take Notice
Improved star ratings or patient satisfaction
Entry into new payer contracts (especially Medicaid, managed care or ACOs)
Tech adoption that boosts efficiency (e.g., remote monitoring)
Staff retention or recruitment improvements
Final Thoughts
A buyer won’t walk away just because of some rough years. What really matters is your ability to show that the worst is behind you—and that the business is positioned to grow profitably.
Have questions? Let’s talk. Even if you're just exploring your options, I’m happy to walk through the possibilities.
– Jane
Jane Panneton
Vice President / Managing Consultant M&A
(203) 691-1319 | jp@corcoranconsultants.com
Click here for recent Corcoran articles on M&A Topics
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