The merger and acquisition environment for the care-at-home sector, including hospice, home health, and private duty services, has shifted significantly. At the 2025 Financial Summit hosted by the National Alliance for Care at Home in Chicago, a clear theme emerged: deals are still happening, but only for those who are prepared, proactive, and persistent.
Deal Certainty Is No Longer a Given
Not long ago, about 80% of deals that reached a letter of intent (“LOI”) would ultimately close. Today, that figure has dropped to just 50%. The reason? Increasing diligence hurdles and a rising bar for compliance, documentation, and leadership readiness. In this environment, diligence issues don’t just delay deals, they can kill them.
The Power of Preparation: QoE and Mock Diligence
The quality of earnings (“QoE”) review is no longer just a buyer tool, it’s a signal. Sellers who come prepared with an initial QoE report demonstrate a clear understanding of the process and confidence in their financial narrative. In this market, that can be the difference between a buyer leaning in or walking away.
The keyword here is “defensibility.” Can you explain the source of your revenue growth? If you’ve had recent rate increases in your state, have those translated into real revenue and how have staffing costs adjusted in response? Buyers are increasingly wary of financials built on aggressive projections or unverifiable assumptions.
For sellers, mock diligence calls are now a must. Preparing your team for buyer scrutiny — especially on sensitive topics like turnover, compliance, and leadership bench strength — can help avoid surprises and build trust across the negotiating table.
Compliance: A Risk and an Opportunity
Buyers are scrutinizing compliance practices more than ever, and rightfully so. A Stark Law self-disclosure, for instance, can take years to resolve and may bring a deal to a halt. Likewise, pending audits and high denial rates can rattle buyers. As one speaker noted, “extrapolation” is the scariest word in a diligence process. But the inverse is also true: best-in-class compliance can yield deal premiums. Demonstrating a commitment to strong internal auditing, periodic gap analyses, and executive-level support for your compliance team speaks volumes to potential acquirers.
This also means understanding how new technology is being used within your organization. Artificial intelligence is emerging as a new area of diligence. Buyers want to know: Is it being used responsibly — particularly in clinical care — or is it being misapplied in ways that might expose the organization to risk? More importantly, will your AI tools and practices integrate cleanly into the buyer’s existing systems?
People Still Matter Most
In care-at-home, people are your greatest asset and greatest risk. High staff turnover can torpedo a deal, especially if it signals deeper issues around culture, satisfaction, or leadership. Buyers now look closely at engagement and satisfaction scores and want evidence of a strong leadership bench that can weather the transition and support growth.
Leadership readiness also extends beyond the closing. Buyers want to see clear post-closing plans for people, processes, and systems. Are salary levels aligned? Are your platforms compatible? Are expectations clear? If the transition of executive management isn’t thoughtfully planned and timed, it can undermine the very synergies the deal was meant to create.
Structure and Strategy Matter
Another key insight: Know your core service line and be great at it before expanding. Venturing into new segments without the right structure, strategy, or personnel can dilute your value in the eyes of buyers. This is especially true in an environment where buyers are looking for reliable growth and clean integration, not rescue missions.
Deal structure also matters. Asset deals can present process challenges, particularly around obtaining consents for contract assignments. But even stock deals aren’t immune — many contracts require notice if there’s a change in control. Understanding these nuances early can help avoid delays or legal snags late in the process.
A New Emphasis on Contract Management and Breach Testing
Contract review and transition planning should now begin well before closing. Buyers want to understand what they’re inheriting, and sellers should be proactive in identifying risks and renegotiation triggers. Conducting a “pen test” for breach exposure — essentially a focused audit on contract vulnerabilities — can help identify areas of concern before they become deal-breakers.
The Road Ahead
Despite these headwinds, opportunities abound. Interest in the care-at-home sector remains high, particularly for organizations that can demonstrate consistency, compliance, and clarity. In today’s market, dependability and defensibility are the ultimate differentiators.
Sellers who invest in their people, understand their numbers, and prepare thoroughly for diligence will find themselves well-positioned in an increasingly selective market. And buyers — many of whom are becoming more disciplined and sophisticated — will reward those efforts with continued deal activity and, in some cases, premium valuations.
In short: the M&A environment in care-at-home may be more challenging than it once was, but for those who are ready, it’s still full of potential.
