Plain-English definitions of every term you'll encounter selling a home care, home health, or hospice business. Each term links to a full explainer when one exists.
Comprehensive marketing document distributed under NDA to qualified buyers. Describes the business, financials, market, and growth opportunity in 30–60 pages.
Written document setting out principal terms of the proposed transaction. Most provisions non-binding; exclusivity, confidentiality, and expense allocation typically binding.
Enterprise value expressed as a multiple of trailing EBITDA. Home care multiples range from ~4x (small private-pay) to 12x+ (scaled, certified platforms).
Enterprise Value (EV)
Total value of the business operations: equity value + debt − cash. The headline number quoted in M&A deals.
Portion of purchase price held by third-party escrow agent to secure indemnification claims. Typical: 5–10% for 12–24 months with R&W; 10–15%+ without.
Insurance policy that covers buyer indemnification claims, replacing seller indemnification beyond a small retention. Standard on home care deals above ~$25M.
Seller obligation to make buyer whole for losses arising from breaches of reps & warranties or specified matters. Caps, baskets, and survival periods are heavily negotiated.
Final rule requiring 80% of Medicaid HCBS payments to flow to direct caregiver compensation by 2030. Material valuation implication for Medicaid-heavy agencies.
Buyer
Strategic Buyer
Operating company in the same or adjacent industry. Pays for synergies; typically slower process; may require longer transition.
Financial Buyer
Private equity firm or family office. Buys for cash flow and growth; uses leverage; typically holds 4–7 years before exit.
Independent Sponsor
Deal-by-deal investor without committed fund. Raises equity per transaction. Slower close; often requires significant rollover.
