How to evaluate and compare offers for your home care agency

What should you compare besides the headline price?

Compare three numbers for every offer: the cash you receive at closing, the deferred money you may receive later, and a risk-weighted total that discounts each deferred piece by how likely it is to be paid. In the worked example below, the offer with the lower headline puts about $1 million more in the owner's account on closing day.

How do you turn a letter of intent into cash at closing?

Start from the headline price and subtract everything you will not receive on closing day. Ask each buyer to confirm in writing that its price is cash-free and debt-free, meaning you keep your cash and pay off your debt; some letters leave this open.

Deferred pieces

The seller note, the maximum earnout and any rollover equity.

Escrow or holdback

The amount set aside for indemnity claims, which comes back later if no claims are made.

Debt payoff

Your line of credit, equipment loans and any other debt the buyer requires you to clear.

Your deal costs

Attorney, CPA and other fees. An F reorganization adds tax and legal work.

Working capital

Compare the buyer's proposed peg, and the reserve it applies to your Medicaid and private pay receivables, with your own trailing average.

How much is an earnout, seller note or rollover really worth?

Value each deferred piece at a discount you can explain, and use the same discounts for every offer. Earnouts deserve the steepest one: in SRS Acquiom's data on deals outside life sciences, sellers received 21 percent of the maximum potential earnout dollars, and lower middle-market deals that paid anything paid a median of 43 cents on the dollar.

A seller note is a fixed debt, so it is worth more than an earnout of the same size, but it usually ranks behind the buyer's bank, which can block payments if the buyer breaches its loan terms. Rollover equity can end up worth nothing or several times what you put in, depending on the platform's debt, any preferred equity ahead of you and the price at its next sale, so value it as a range.

Which terms besides price matter most in a home care sale?

In home care, the terms that most often change an owner's outcome are about people, payers and liability. Read each letter for these points and ask about any it leaves out.

Caregivers and office staff

Jobs for all caregivers at current pay, accrued PTO, and whether your schedulers and care coordinators stay. Your census follows your caregivers.

Your role after closing

How long you stay, at what pay, and whether part of the price has been relabeled as a consulting fee, which is usually taxed as ordinary income.

Non-compete scope

Five years across every state a platform serves is far broader than three years in the counties you serve today.

Brand

Whether your agency name stays in your market. Discharge planners, case managers and families refer to a name they know.

Change of ownership and recoupment

Which licenses, Medicaid enrollments and Medicare provider agreements must transfer, who carries the cash gap while they are processed, and who pays if a payer recoups money for visits billed before closing.

Tax structure

Asset sale, stock sale or F reorganization. The same price can leave you a materially different amount after tax, so have your CPA model each offer.

How can you tell which buyer will actually close?

Judge certainty of closing from evidence, not from the buyer's confidence. A buyer who has closed home care deals in your state, has its money committed, and has asked hard questions about your payer mix and caregiver hours is far more likely to close at the agreed price.

Financing

Cash on hand or committed fund equity beats a bank loan that has not been approved. Ask for a commitment letter or proof of funds.

Diligence so far

A buyer that has already reviewed payer mix, EVV data, caregiver turnover and referral sources has less room to retrade after signing.

Conditions

Count them. Financing, board approval, a new license and a payer consent are each a way for the deal to slow down or end.

Three offers for the same agency, side by side

The agency in this illustrative example is a two-office personal care agency with about $6 million of revenue, a mix of Medicaid waiver and private pay clients, and $700,000 of adjusted EBITDA. It is an S corporation with $300,000 of debt. Three buyers offer 5.0x to 6.5x EBITDA, inside the regional personal care band in our EBITDA multiples guide: a first-time owner-operator with a bank loan (A), a regional home care company already licensed in the state (B), and a private equity backed platform buying 70 percent and asking the owner to roll 30 percent (C). The buyers and numbers are hypothetical; each term is one owners see in real home care offers.

The math: what each offer is worth to you

The table walks each offer from headline to cash at closing, then adds back deferred value on stated assumptions. Escrows count at full value, which assumes no indemnity claims, though a holdback kept by the buyer is easier to withhold than money with an escrow agent.

The earnout counts at 20 percent, rounded down from SRS Acquiom's finding that sellers received 21 percent of maximum earnout dollars outside life sciences; this one is all or nothing on 10 percent annual growth in a business limited by how many caregivers it can hire, so nothing argues for more. The seller note counts at 80 percent. That is a judgment, not a statistic, since no comparable published data tracks seller note repayment: the note is subordinated, unguaranteed and owed by a first-time buyer carrying a new bank loan. Rollover is shown at zero, at 0.6x (the downside case in our rollover equity guide) and at 2.0x (its base case).

Which offer fits which owner?

If you want to step away within a year, Offer B is the strongest: most of the money at closing, no financing condition, a buyer already licensed in your state and a narrow non-compete. If you will work three more years and believe in the platform, Offer C has the most upside, provided the platform shows you its debt and any preferred return ahead of your units before you sign. Offer A competes only if it changes: a lender commitment letter, a third-party escrow, a personal guarantee on the note and an earnout that pays partially on partial growth. If its loan is SBA-backed, ask how the lender will treat your note; our unsolicited offer guide explains why that can push payments out for years.

Have your attorney and CPA review the final two letters, because after-tax results differ between an asset sale, a stock sale and an F reorganization even at the same price.

Medicare and Medicaid timing: who carries the risk?

If you bill Medicare as a home health agency or hospice, a buyer that accepts assignment of your provider agreement inherits your billing history. CMS's Financial Management Manual, revised in 2025, makes the new owner responsible for overpayments Medicare made to the old owner, including ones found after the sale, and says Medicare will collect from the new owner whatever the purchase agreement says. That is why buyers ask for a special escrow or indemnity for billing before closing; compare how large each request is and how long it lasts.

While the change of ownership is processed, CMS's Program Integrity Manual has the Medicare contractor keep paying the old owner and leaves the old and new owners to arrange payments between themselves. Ask each buyer how money landing in your account in that window is passed through, and who funds caregiver payroll meanwhile. Check the 36-month rule in 42 CFR 424.550 too: if your agency enrolled or last changed majority ownership within 36 months, billing privileges do not convey without an exception, which can change the structure or timeline an offer depends on. Medicaid and license rules differ by state; our state guides cover them.

What a real deal shows about cash, stock and time to close

In May 2023, Amedisys agreed to an all-stock merger with Option Care Health worth $97.38 per share at signing. On June 26, 2023, it switched to Optum's all-cash offer of $101 per share, and UnitedHealth Group paid Option Care's $106 million termination fee on Amedisys's behalf. The cash offer was higher and did not ride on another company's share price, yet it closed only on August 14, 2025, after the Justice Department challenged it and settled on the sale of 164 home health and hospice locations in 19 states. A small agency sale will not face antitrust review, but every condition in a letter is time during which your census, caregivers and referral sources keep moving.

Questions to ask every buyer before you choose

Ask the same questions of each buyer, in writing, so the answers can be compared.

How do you improve an offer without running an auction?

Go back to each buyer separately with two or three specific requests, each tied to a reason it can check. Show the buyer whose peg uses a 9 percent receivable reserve your actual three-year write-off history, or offer a longer transition in exchange for moving earnout dollars into cash at closing. A buyer will often accept a narrower non-compete or a shorter escrow more easily than a higher price.

Do not let a good offer go stale while you wait for a better one. Letters of intent usually expire, and the price rests on your trailing twelve months: a lost Medicaid contract, a caregiver shortage or a rate change next quarter shows up in diligence and invites a lower price.

How Lartico Capital fits in

With Lartico Capital, you approve the buyers you want to talk to, and they sign an NDA before they learn your name. Buyers who want to go further send letters of intent, and you decide which, if any, to pursue. There is no cost to sellers: buyers pay Lartico Capital's fee at closing. Lartico Capital does not negotiate for you or give legal or tax advice, so bring in your M&A attorney and CPA before you sign.