How selling actually works, step by step

Stage 1: your details, kept private

You send revenue, adjusted EBITDA, payer mix, state, staffing, and what you want out of a transaction. That is enough to know which buyers fit. No exclusivity, no retainer, and no obligation to continue.

Stage 2: the buyer list

Within about two weeks we come back with the acquirers who match, and why each one matches. Buyers see an anonymized profile until you approve being named. You decide who to meet and who to skip.

Stage 3: direct conversations

You speak with buyers yourself, usually one or two calls each. We help you prepare and compare, but we do not sit between you and the person who will own your business. Ask every buyer about structure, your role, staff treatment, and their last three closings in your segment.

Stage 4: letter of intent

A serious buyer issues a letter of intent covering price, structure, rollover, earnout, your commitment, and an exclusivity period. This is the moment your leverage is highest, so negotiate the terms that matter now rather than during diligence. Have healthcare M&A counsel review it before you sign.

Stage 5: diligence and approvals

Expect a quality of earnings review, billing and coding sampling, compliance and licensure review, employment and contractor review, and payer contract analysis. In parallel, the buyer works through licensure transfer, change of ownership filings, and payer notifications. This stage is where deals slip, and organized records are the single best defense.

Stage 6: closing and after

Definitive agreements are signed, funds move, and the working capital settlement is trued up weeks later. Staff are usually told at or just before closing, and we help owners plan that message so the team hears a clear story rather than a rumor.

The Pre-Market Preparation Phase

Selling your healthcare business starts long before you find a buyer. The first step is 'cleaning up' your financials. This means moving from cash-basis to accrual-basis accounting and ensuring all personal expenses are clearly identified. You should also audit your clinical files to ensure they are complete and compliant with state and federal regulations. A buyer will likely look at a random sample of your charts, and a single mistake can lead to a deeper, more painful investigation.

In the home health sector, you must also consider the CMS 36-month rule. If you have changed majority ownership within the last three years, you may not be able to transfer your Medicare provider agreement to a new buyer. This can effectively kill a deal before it starts. Checking your 'PECOS' enrollment data to verify your last majority change date is an essential first step. This guide is for informational purposes only and is not legal or tax advice.

From LOI to Due Diligence

Once you receive an offer you like, you will sign a Letter of Intent (LOI). This document outlines the price and structure of the deal but is usually non-binding, except for the 'exclusivity' period. During exclusivity, you cannot talk to other buyers. This is when the real work begins: Due Diligence. The buyer will hire accountants and clinical experts to verify every detail of your business. They will check your billing, your clinician licenses, and your employee contracts.

This is also the time when the 'Working Capital' target is set. Working capital is the money needed to run the business day-to-day (current assets minus current liabilities). A standard enterprise-to-equity bridge involves starting with the agreed price, adding cash, and subtracting debt and any working capital shortfall. Understanding this bridge is vital to knowing how much cash you will actually receive at closing. Consult with a professional to navigate these calculations.

Closing and the Transition

The final stage is the 'Definitive Purchase Agreement' (DPA). This is a massive legal document that details exactly what is being bought and what 'Representations and Warranties' you are making about the business. The documents may place a portion of the purchase price into an escrow account for an agreed period. This money acts as a security deposit for the buyer in case they discover any undisclosed liabilities after the sale.

After the papers are signed, the transition begins. For agencies, this involves a Change of Ownership (CHOW) process with state regulators and CMS. This can take months, during which time the buyer may operate under a management agreement. Managing staff morale during this time is critical; if your key clinicians leave, it could trigger an earnout reduction. Being transparent with your team at the right time is one of the hardest but most important parts of the process.