Selling a Nursing & Residential Care Business

Most Nursing & Residential Care deals price off cash flow, often EBITDA or SDE, but the multiple moves with operational risk. Buyers pay more for stable census, low agency dependence, clean survey history, predictable collections, and a leadership team that can survive turnover. Real estate also matters. A strong building plus the real estate can trade very differently than operations-only under a lease. For a starting point, try Rejigg’s free valuation calculator, then pressure-test the number against staffing coverage, survey posture, and payer timing.

Often, yes, especially for smaller assisted living or residential care homes that qualify as an operating business with supportable cash flow and transferable licensing. SBA lenders still dig deep into survey history, staffing coverage, and collections predictability, since a billing delay can create a payroll problem fast. Expect requests for add-back support, payroll detail that shows normalized agency and overtime, and a practical transition plan for Administrator and DON coverage. Rejigg’s SBA loan calculator helps you model payments using realistic rates and down payments.

Most sales take months, not weeks, because buyers run clinical, regulatory, and payer diligence, and change-of-ownership approvals can stretch the timeline. You can usually speed it up by having survey packets, census history, staffing by shift, agency and OT trends, payer mix, and an entity and license map ready before you go to market. Deals move fastest when a buyer can underwrite risk in the first few calls, rather than discovering issues mid-diligence. Rejigg keeps the process organized with a guided workflow and a built-in data room.

No. Many owners sell directly, and some buyers prefer it because they can ask operator-to-operator questions about staffing, surveys, and admissions without a filter. Broker fees are often 5% to 10%, and a glossy pitch can backfire if it papers over agency use, survey risk, or payer delays that experienced operators will uncover anyway. Rejigg gives you buyer access, digital NDAs, a secure data room, messaging, and offer tracking, with sellers staying in control. Start with the preparation guide.

Buyers usually ask for three years of P&Ls (or what you have), a current year-to-date P&L, and balance sheets, plus enough detail to support add-backs. In Nursing & Residential Care, they also want tie-outs between operations and dollars. Expect questions like how census translates to revenue, how payroll matches shift coverage, and what agency and overtime did during low-census or survey periods. If Medicaid or managed care is meaningful, AR aging and collections notes often come up to size working capital. Rejigg’s QuickBooks integration can pull financials into a structured data room.

Common add-backs include owner pay above market, personal expenses, one-time legal and consulting fees, non-recurring repairs, and temporary recruiting or agency spikes you can document. In this industry, buyers tend to discount staffing add-backs unless you can show the schedule is actually covered and agency use fell for a sustained period. The cleanest add-backs come with invoices, payroll reports, and a short written note that ties the expense to a specific event, like an outbreak or a DON vacancy. Rejigg’s data room lets you attach proof next to each add-back line.

Either can work, and the best choice depends on your buyer pool and how much deferred maintenance sits in the building. Selling the real estate can raise total proceeds and appeals to buyers who want full control over life-safety upgrades and capex timing. Leasing can lower the purchase price for the operating business and sometimes makes financing easier, but buyers will push hard on rent, renewal options, and who pays for big-ticket systems like roofs, HVAC, and fire safety. Rejigg helps you share leases, inspections, and capex history cleanly during diligence.

Because Medicaid and managed care cash can lag, buyers often set a working-capital target or require a minimum cash buffer so payroll and vendors are covered after close. If accounts receivable are material, you also need a clear plan for AR. Some deals have the seller keep it, others have the buyer purchase it, and many use a true-up. What matters is matching days to cash against payroll cadence and vendor terms so the new operator does not start in a hole. Rejigg’s deal tracking helps you compare offers on working capital and AR terms, not just price.

In an asset sale, the buyer typically picks which assets and liabilities transfer, which can reduce exposure to unknown claims. Licensing and payer enrollments still need a plan, since the state and payers may treat the handoff differently than a typical business sale. In a stock sale, the entity stays intact, which can simplify certain contracts, but buyers often demand stronger reps, warranties, and escrow because they inherit the company’s history. The best structure depends on state rules, payer requirements, and any open claims or survey issues. Rejigg’s deal negotiation guide breaks down the tradeoffs before you sign an LOI.

Earnouts show up when census is choppy, payer mix is shifting, or the buyer expects a referral or staffing transition after close. Seller financing can also bridge a valuation gap, and it is common in SBA-backed deals where the buyer wants to reduce cash down. The terms matter a lot. Most sellers want strong collateral, clear default language, and reporting covenants tied to compliance and financial statements. If there is an earnout, define the metric carefully, like average census, payer mix thresholds, or EBITDA, since documentation or authorization changes can skew results. Rejigg’s offer tools help you compare price versus terms across buyers.

Most operators keep a sale confidential until the deal is far enough along to avoid staff turnover and family anxiety. As closing gets closer, communication becomes more structured. Buyers usually want a plan for who talks to staff, what families are told, and how you will maintain routines like incident escalation, call coverage, and care conferences. Administrator and DON continuity matters, and some buyers ask for overlap or interim coverage commitments. Rejigg supports confidentiality with digital NDAs and lets you control which buyers see sensitive documents, and when.

Buyers focus on what can break the building fast. Survey and enforcement risk, thin staffing on key shifts, agency dependence, leadership turnover, and payer friction like auth delays and denials are at the top of most diligence lists. They also look for admissions concentration, since losing a hospital relationship can drop census quickly in some markets. Finally, they ask about life-safety capex and deferred maintenance that can create compliance pressure. Sellers who can show timelines, trends, and documented fixes usually keep momentum. Rejigg’s diligence checklists help you stay organized and avoid surprises.

A typical data room includes financials and tax returns, payroll summaries, agency invoices, census reports, payer mix by resident days, AR aging, and notes on collections. Buyers also expect survey reports, plans of correction, complaint investigations, incident summaries, and claims history. Add key contracts, like pharmacy, therapy, hospice, managed care, and staffing vendors, plus licenses, org charts, and any real estate or lease documents and inspections. The goal is to let a buyer connect census to staffing to compliance to cash. Rejigg provides a secure data room with permission controls. See the due diligence checklist.

Confidentiality usually comes down to tight process control. Keep the internal circle small, avoid forwarding drafts, and do not allow buyer visits that look like a survey. In Nursing & Residential Care, rumors can trigger call-outs, resignations, and cautious discharge planners, which can hit census fast. Use NDAs, stage disclosures from high-level to detailed, and share sensitive staffing and compliance files only when a buyer is serious. Rejigg helps by pre-vetting buyers, requiring digital NDAs, and letting you control document access by buyer and stage.

It depends on the buyer and the change-of-ownership timeline, but many buyers want a defined support period to hand off referral relationships, help with key families, and keep billing and compliance routines steady. The most useful support is usually practical, like how staffing escalation works on weekends, which hospital case managers call after hours, and what documentation habits keep managed care auths moving. In regulated settings, overlap can also help ensure required roles and signatures are covered without gaps. Rejigg’s transition planning guide helps you set a clear, time-bounded handoff.

In care deals, certainty of close often matters as much as price. Compare financing strength, the buyer’s realistic change-of-ownership plan, working capital requirements, escrow and indemnity scope, and whether the assumptions rely on a risky census or staffing ramp. Also look at what the buyer needs from you after close, like transition hours, consulting, or a non-compete, plus how any earnout is measured and audited. Small wording differences can change your risk meaningfully. Rejigg’s deal dashboard lets you compare offers side-by-side, including timelines, contingencies, seller notes, and earnouts.

Taxes depend on the deal structure, your entity type, and how the purchase price is allocated across goodwill, equipment, and real estate. In Nursing & Residential Care, allocations can be a big deal because buildings often have meaningful FF&E and real estate value, and that can change depreciation recapture and capital gains treatment. It is worth bringing in a healthcare-experienced CPA before an LOI, since a “great” price can net out poorly if the allocation is unfavorable. Rejigg helps you keep deal terms and draft allocations organized so your CPA can review quickly during negotiation.