Mergers & Acquisitions in Home Care: What to Know Before You Start
In Episode 7 of The Home Care Experience with T&A, Amy Taylor and Troy Brooks tackle a topic many home care professionals will face at some point: buying and selling a home care agency. Whether you are ready to retire and pass the torch or looking to expand your footprint in the industry, the M&A (mergers and acquisitions) process in home care is unlike any other.
Amy and Troy bring decades of legal and financial experience to the table in this deep-dive conversation, cutting through the confusion with humor, hard truths, and actionable advice.
Why M&A in Home Care Is Not Like Other Industries
You might think buying or selling a business is a fairly standard process. But when that business is a home care or hospice agency? The rules change dramatically.
From state-specific licensure laws and federal Medicare regulations to provider numbers and managed care contracts, the process is steeped in legal nuance and financial exposure.
Troy puts it best: “You’re not just buying a business; you’re buying the risk that comes with it.”
Step One: Do not Skip the Professionals
One of the key themes of the episode is the importance of involving professionals early. That means talking to a lawyer and a CPA before you sign an NDA or LOI (letter of intent).
Amy notes that many sellers are caught off guard by how complex the process really is. “People either think it’s going to be super simple, or they’re paralyzed by how overwhelming it feels,” she says.
Either way, getting legal and financial advice upfront can save you thousands of dollars and months of cleanup down the road.
Stock vs. Asset Purchase: Know the Difference
The episode dives deep into the two main types of acquisitions:
- Stock Purchase: The buyer purchases the ownership interest in the company. This is easier from a regulatory standpoint because the provider number stays intact but it also transfers any existing liabilities to the buyer.
- Asset Purchase: The buyer purchases select assets (client list, staff, equipment, etc.), and the seller winds down the original business. This route offers cleaner separation but comes with more paperwork, re-credentialing, and regulatory steps.
Amy and Troy walk listeners through real examples of how these two approaches affect taxes, compliance, and even timelines. Their takeaway? Do not decide which is best until you have talked to your CPA.
Due Diligence: The Deal Breaker You Cannot Ignore
“Due diligence” sounds formal, and it is. But it is also essential.
Troy explains that clinical due diligence is even more critical than financials. Billing records may look fine, but if the underlying clinical documentation does not support the claims, the buyer could inherit a nightmare in overpayments or compliance violations.
That is why buyers need to look beyond tax returns and payroll records. Deep dives into patient records, cost reports, and Medicare audits are necessary.
Timing Is Everything but Do Not Rush It
In the episode, Amy shares a common scenario: a seller wants to close by December 31 for tax reasons. But when deals get rushed, steps get skipped and those shortcuts often lead to trouble.
Troy adds that putting artificial deadlines on a deal can increase stress and reduce the quality of decision-making. His advice? Let the process take the time it needs and focus on doing it right.
What About Brokers?
M&A brokers can be helpful, but they are not miracle workers.
Amy cautions against brokers who call with promises of eager buyers. “They’re usually just fishing for sellers,” she says. Troy echoes that sentiment, explaining that a good broker will help filter out the tire-kickers and bring only qualified prospects to the table—but sellers should still be cautious and not hand over sensitive data too early.
Real Talk on Owner Financing
The episode also gets real about owner financing, a tempting option for buyers who do not have capital upfront. But Troy warns that once a buyer defaults on payments, the agency you get back likely is not the agency you sold.
His advice to sellers: If you are going to offer financing, secure a significant down payment and understand that collecting on a defaulted loan is a gamble at best.
Regulatory Chaos: Do not Miss This Part
One of the most overlooked aspects of buying and selling a home care agency is how regulatory agencies respond. Even with a stock purchase, Medicare, Medicaid, VA contracts, and managed care agreements all have unique processes for change of ownership or credentialing updates.
Mess that up, and you risk interruptions in billing or worse, claw backs and compliance penalties.
Final Takeaways
The process of buying and selling a home care agency is complicated, but it is manageable with the right guidance.
Here is what Amy and Troy want you to remember:
- Always involve legal and financial experts early.
- Understand what type of deal (stock vs. asset) best fits your situation.
- Do your due diligence, especially clinical.
- Set realistic timelines and do not rush the process.
- Know that even “amicable” deals can go south get everything in writing.
Listen to Episode 7 now on Apple Podcasts, Spotify, or TheHomeCareExperience.com
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