How Selling a Home Health or Hospice Agency is Like a Fine Art Auction

Understanding the process when preparing to sell a home health or hospice agency—who the buyers are and how they determine valuation—is critical. In some key ways, putting your business on the market is a lot like putting an invaluable and unique piece of art on the auction block. While healthcare mergers and acquisitions (M&A) involve complexities and confidentiality concerns that differ from bidding on a priceless work of art, this comparison illustrates a few key similarities and provides insight into how buyers approach the transaction process.

Limited Pool of Buyers

The buyer pool for home-based care agencies, much like that of fine art, is relatively small. For example, consider putting artwork by Monet or Van Gogh up for auction with a multi-million dollar starting bid. Only a select group of buyers with significant interest, motivation, and resources, such as major museums or wealthy collectors, have the ability to participate. This is, of course, a very limited group and much smaller than the broader market for common consumer goods or even the general housing market.

Likewise, the buyer pool for home health or hospice agencies is limited to organizations with sufficient resources and a very specific interest in the industry. Because skilled home-based care is a highly regulated industry with significant compliance, clinical, and operational complexities, the typical buyers look very different from those who acquire other types of local or regional businesses like laundromats, dry cleaners, restaurants, or bars for example.

Home-based care agencies are not typically purchased by individual operators looking for a lifestyle business. Instead, most buyers fall into one of two categories: large national or regional strategic providers, or private equity groups (also known as “financial buyers”). These organizations are generally well-established in the home-based care sector or have specifically and thoughtfully targeted the industry for large investment and have the motivation to invest in future growth through acquisition and often simultaneous de novo expansion. As a result, this pool of buyers is extremely small relative to many other industries.

Timing Matters

Knowing which types of buyers pursue home-based care M&A is essential, but timing is just as important. Even large strategic or financial buyers have finite bandwidth, and acquisitions must align with their broader priorities. A wealthy art collector, for instance, may only have the capacity to participate in one or two auctions per year—not necessarily because of budget constraints, but because they may be focused on building a different collection, managing personal obligations, traveling, or pursuing other interests. Although they might admire a Van Gogh, they could pass on bidding if they are currently focused on other endeavors like philanthropy.

Similarly, a strategic or financial buyer that might otherwise be highly interested in your agency may choose not to engage or submit an offer at a particular time if their resources are deployed elsewhere, like the completion or integration of other acquisitions, or other initiatives or internal projects. Interest is dynamic, and the window during which a buyer is willing and able to pursue a transaction can open and close—and possibly reopen—very quickly.

Interest Drives Valuation

Another similarity between a fine art auction and the healthcare M&A process is that buyer interest ultimately drives valuation. If you put a Picasso painting up for auction in a room full of Van Gogh collectors, it will likely sell for far less than it would in front of collectors specifically seeking work by Picasso, if it even sells at all. In the same way, a home health agency may appeal strongly to one buyer but not to another based on factors such as geography, revenue, payor mix, service lines, or overall strategic fit.

Positioning your business in front of the right buyers—and doing so at the right time—is therefore the most significant factor in maximizing valuation. Identifying and engaging those buyers can be a complex and nuanced process, which is why working with an experienced M&A advisor with deep industry relationships is essential for achieving the best possible outcome.

Conclusion

Selling a home health or hospice agency shares a number of similarities with a fine art auction, but there are also several important distinctions. In a traditional auction, the seller cannot choose among bidders; the item simply goes to the highest offer. By contrast, healthcare business owners have the ability to negotiate terms, compare offers, and choose the buyer that aligns best with their goals. The overall valuation, while always extremely important, might not be the single overriding term. A buyer may ultimately be chosen because they set themself apart in other key ways. In healthcare M&A, choosing a buyer and negotiating deal terms is far more nuanced than an auction process.

For these reasons, owners considering a potential sale need an experienced M&A advisor who knows this space and can connect you with the right buyers, optimize deal terms, and guide you toward a successful close.

An M&A Guide You Can Trust

Stoneridge Partners is a national healthcare mergers and acquisitions advisory and strategic consulting firm that manages complex transactions for home care, home health, hospice, and behavioral health companies.

We’ve been in business for over 25 years and have assisted owners just like you sell their healthcare-related businesses. We have accumulated a deep network of motivated buyers during our 25 years, and we have years of experience as operators, attorneys, and development professionals. We’ve been in your shoes, and we know the daily challenges you face.

If the thought of a potential sale is of interest to you, let us help you optimize your prospects for a successful transaction and the highest valuation.

So how do you start? Please visit our website at www.stoneridgepartners.com or contact us at 800-218-3944 for a confidential conversation.