How to Buy a Home Care Agency: Deal Steps, Licensing and Financing
Families who find a home care agency they trust often stay with it for years, and the caregivers who support those families are the heart of the business. An established agency can offer a buyer existing client relationships, a trained caregiver team, referral relationships and a track record that can be reviewed. It also comes with responsibilities that make the purchase different from most service businesses: the well-being of the people receiving care, a workforce that can be hard to replace, and licensing rules that vary by state. Knowing how to buy a home care agency means evaluating each of those pieces before you commit.
This guide is about acquiring an existing non-medical home care agency, such as a personal care, companion care or homemaker-services business. It does not cover skilled home health, Medicare-certified home health agencies, hospice or other clinical providers, which operate under different rules. Nothing here is legal, regulatory or tax advice; confirm requirements with the appropriate authorities and qualified professionals.
Step 1: Clarify What You Want to Buy
- Services: companion care, personal care, homemaker services, respite care or a combination
- Payer sources: many agencies primarily serve private-pay clients, while some also receive payments through long-term-care insurance, veterans’ programs or state-funded programs where applicable
- Market: the communities served and how far caregivers travel
- Franchised or independent: franchised agencies come with brand standards and franchisor approval requirements, while independent agencies offer more flexibility
- Your role: whether you will manage daily operations or rely on an administrator
Step 2: Understand the Licensing Picture Early
Licensing requirements for non-medical home care differ from state to state, and some states have little or no licensing for certain services while others regulate them closely. Whether an existing license carries over, must be reissued or requires a change-of-ownership process depends on the state, any program participation and how the deal is structured. Our guide to home care agency change of ownership explains these considerations in detail.
Step 3: Review the Numbers
Request several years of tax returns and financial statements, along with reports showing hours of care delivered, revenue by payer source, payroll records and bank statements. Compare them against each other. Understanding where revenue comes from, and how much depends on a few clients or referral sources, is essential. Our article on home care payer mix and referral concentration explains why.
Step 4: Understand What Drives Value
Price typically reflects cash flow, payer sources, the stability of the caregiver workforce, client and referral concentration and the agency’s reputation. Our guide to home care agency valuation explains how these factors fit together.
Step 5: Complete Due Diligence
Due diligence tests financial records, payer sources, client and referral relationships, caregiver workforce information, licensing and regulatory history, insurance and contracts. Client and personnel records are sensitive and subject to applicable privacy and employment requirements. Our home care agency due diligence checklist lays out what to review.
Step 6: Plan for Caregiver Retention
Caregivers are often the reason clients stay. Buyers should understand how caregivers are recruited, paid and supported, and plan how the transition will be communicated to them. See our guide to home care caregiver retention.
Step 7: Arrange Financing
Acquisitions of established agencies are commonly financed with buyer equity, an SBA-backed or conventional loan and sometimes seller financing. Lenders will review documented cash flow, payer sources, caregiver stability and your experience. Our guide to SBA loans for home care agencies explains how SBA financing may be used.
Step 8: Close and Transition Carefully
Closing may involve licensing or change-of-ownership steps as required, updating any payer arrangements as applicable, assigning or replacing the office lease and transferring scheduling systems and records in compliance with applicable requirements. A thoughtful transition, often with the seller’s help, reassures clients, families and caregivers that care will continue without interruption.
Common Mistakes
- Assuming licenses or payer arrangements will carry over without confirming requirements
- Overlooking dependence on a few clients or referral sources
- Underestimating caregiver turnover risk during a transition
- Relying on seller summaries rather than verified records
- Leaving too little working capital to cover payroll after closing
US Professional Funding helps buyers finance the acquisition of existing, operating non-medical home care agencies. Learn more about our home care agency acquisition financing.
