Buying a Home Care Agency
A demographic tailwind you can believe in, priced by payer mix and run on caregiver retention. How non-medical home care trades, why the Medicaid and private-pay split defines the risk, and the compliance items that surface after close.
Know Which Business You Are Buying
Home care spans three different businesses that get discussed as one: non-medical personal care (companionship, bathing, meals), Medicare-certified home health (skilled nursing under clinical billing rules), and hospice. Searchers overwhelmingly buy the first. It carries lighter licensure, no clinical billing complexity, and the cleanest demand story, an aging population that wants to stay home. This guide covers non-medical agencies; certified home health is a different acquisition with different diligence.
What Agencies Trade For
Broker data through 2025 puts small and mid-sized non-medical agencies at roughly 2x to 3.6x SDE, averaging near 2.9x, with single-market agencies reported around 3x to 5x EBITDA and regional operators above that. Payer mix does the sorting inside the band: private-pay-heavy books with durable recurring hours price at the top, while Medicaid-heavy books trade lower because rates are set by the state and move with budgets. Ask for revenue by payer before anchoring on anything.
Caregiver Retention Is the Operating Metric
Industry caregiver turnover commonly runs 60% to 80% a year, and every departure costs recruiting, onboarding, and sometimes the client relationship itself. Coverage of the category treats retention below 50% as evidence of real operational discipline worth a premium of a turn or more. In diligence, pull actual turnover by cohort, open-shift and missed-visit rates, recruiting pipeline and time-to-fill, and pay rates against the local market, because scheduling stability is what clients are actually buying.
The Payer Mix Question
Private pay means consumer sales, weekly invoices, and rate freedom, with churn tied to client mortality and family budgets. Medicaid personal-care programs mean state-set rates, authorization paperwork, and electronic visit verification mandated under federal law, with recoupment risk when documentation gaps surface. Neither is wrong, but they are different businesses operationally, and a book split across both needs management fluent in each. Confirm every state license is current and matches the services actually delivered.
What to Verify in Diligence
Worker classification first: agencies running caregivers as 1099 contractors carry reclassification exposure that several states have pursued, and a W-2 model with clean payroll is what lenders and buyers expect. Then client concentration (a few high-hour clients can dominate revenue), referral sources and who owns those relationships, billing and visit-verification records for any Medicaid volume, complaint and incident history, and insurance coverage including non-owned auto, a commonly missed exposure when caregivers drive clients.
Financeability Notes
Non-medical agencies fit SBA 7(a) structures, with underwriting attention on payer concentration, caregiver turnover, and the transition plan for referral relationships. Medicaid-heavy books add rate-change risk that lenders price through more conservative coverage expectations. Model debt service on hours you believe survive both a rate adjustment and normal client run-off, and treat the schedule coordinator as a key employee in the retention plan.
What the Data Says
Broker data through 2025 places small and mid-sized non-medical home care agencies at roughly 2x to 3.6x SDE (averaging near 2.9x), with single-market agencies reported around 3x to 5x EBITDA and payer mix sorting books inside the bands; directional ranges, not comps.
Industry coverage puts typical caregiver turnover at 60% to 80% annually and treats sustained retention below 50% as a differentiator worth a premium, making turnover data a primary buyer diligence item.
Electronic visit verification is federally mandated for Medicaid personal-care services under the 21st Century Cures Act, and compliance gaps can trigger billing recoupments; worker-classification exposure from 1099 caregiver models is a recurring diligence finding.
Source: Home care sale guidance (2026)
Compare bands across industries in the Industry Multiple Benchmarks.
Where to Go Next
Get New Guides by Email
More industries are in research. Leave your email to receive each guide as it publishes.