After being involved in numerous home care transactions—some that closed smoothly at premium valuations, others that fell apart or left significant money on the table—I've identified clear patterns. These seven mistakes consistently cost owners money, delay deals, or kill them entirely. The good news? Every one of them is avoidable with proper preparation and guidance.
The home care M&A market is active, with buyers eager to acquire well-run agencies. But "well-run" in day-to-day operations and "well-prepared for sale" are different things. Understanding these common pitfalls—and avoiding them—can mean the difference between a successful exit and a disappointing one.
Mistake #1: Waiting Until You're Burned Out
This is the most common and most costly mistake I see. Owners push through year after year, telling themselves they'll sell "when the time is right" or "after one more good year." Then they wake up one morning completely exhausted, desperate to get out at any price.
The problem? Buyers sense desperation. It shows in how you negotiate, how you respond to due diligence requests, and how you talk about the business. Desperate sellers accept lower offers, agree to unfavorable terms, and often can't muster the energy for the 6-12 month process a sale requires.
Even worse, burned-out owners often let the business slip during the sale process. Revenue declines, key employees leave, referral relationships weaken. Buyers notice—and they either re-trade to a lower price or walk away entirely.
The Fix:
Start exploring your options while you still have energy and enthusiasm. The best time to sell is when you could happily keep running the business for another 3-5 years—but choose not to. That's when you have maximum leverage and can be selective about buyers and terms. See our guide on 5 Signs You're Ready to Sell for more on timing.
Mistake #2: Not Knowing Your Numbers
"I think we did about $3 million last year" doesn't cut it. Neither does "my accountant handles all that." Buyers want clean financials, clear add-backs, and documented revenue by payer source. If you can't produce this information quickly and confidently, you look unprepared—and buyers adjust their offers accordingly.
According to Forvis Mazars, common financial issues discovered during due diligence include: inaccurate valuation of accounts receivable, no allowance for uncollectible accounts, unrecorded liabilities, improper recording of owner expenses, and inconsistent treatment of capital assets. Any of these can delay a deal, reduce the price, or kill the transaction entirely.
Buyers also expect accrual-based financial statements, not cash basis. Many home care agencies operate on cash basis for simplicity, but converting to accrual for a sale is time-consuming—often requiring 6+ months of work. If you wait until you're ready to sell to start this process, you've added significant delay.
The Fix:
Get your financials in order now, even if you're not planning to sell for years. Work with a CPA who understands healthcare M&A. Convert to accrual basis. Document your add-backs. Create a clear breakdown of revenue by payer source. The investment pays for itself many times over.
Mistake #3: Overvaluing Based on Revenue, Not Profit
"We're a $5 million agency" sounds impressive. But buyers don't pay multiples of revenue—they pay multiples of earnings (SDE or EBITDA). A $5 million agency with 5% margins ($250K EBITDA) is worth far less than a $3 million agency with 15% margins ($450K EBITDA).
This misconception leads to unrealistic expectations that torpedo deals. Owners anchor on a number based on revenue, then feel insulted when buyers offer based on actual profitability. The negotiation starts from a place of misalignment that's hard to recover from.
| Scenario | Revenue | EBITDA | Value at 4x |
|---|---|---|---|
| Agency A (5% margin) | $5,000,000 | $250,000 | $1,000,000 |
| Agency B (15% margin) | $3,000,000 | $450,000 | $1,800,000 |
The Fix:
Focus on profitability, not just revenue. Understand your true EBITDA after normalizing for owner compensation and one-time expenses. Use realistic multiples for your size and type of agency—see our 2026 Valuation Multiples Guide for current market data.
Mistake #4: Ignoring Concentration Risk
Concentration risk comes in several forms, and buyers scrutinize all of them:
- Client concentration: If one client represents more than 10-15% of revenue, what happens if they leave?
- Referral concentration: If one hospital or physician group sends 30%+ of your patients, that's a single point of failure.
- Payer concentration: Heavy dependence on a single payer (especially Medicaid) creates rate risk.
- Staff concentration: If one key employee manages all your critical relationships, what happens if they leave?
Buyers will either discount their offer to account for concentration risk or structure earnouts around retention of the concentrated relationships. Either way, you're leaving money on the table.
The Fix:
Diversify before you go to market. If you have 18-24 months before your target exit, actively work to reduce any concentration above 20%. Add new referral sources, grow other client relationships, cross-train staff on key accounts, and balance your payer mix.
Mistake #5: Talking to Only One Buyer
Competition creates value. When multiple qualified buyers are interested in your agency, you have leverage. You can negotiate better terms, push back on unreasonable requests, and walk away from a bad deal knowing you have alternatives.
When you're negotiating with just one buyer, they know it. They can take their time, make aggressive demands, and re-trade at the last minute because they know you have no alternative. Even if you have a preferred buyer—perhaps someone you know personally or a company whose culture you admire—having other interested parties strengthens your position.
The Fix:
Run a proper process. Whether you use an M&A advisor or manage it yourself, approach multiple potential buyers simultaneously. Create a competitive dynamic. Even if you ultimately sell to your first-choice buyer, having alternatives ensures you get fair value and reasonable terms.
Mistake #6: Neglecting the Business During the Sale Process
Selling a business is time-consuming and distracting. Due diligence requests pile up. Meetings with buyers multiply. Legal documents need review. It's tempting to let day-to-day operations slide while you focus on the deal.
This is a critical error. Deals typically take 6-12 months from initial discussions to closing. If your numbers decline during that period—revenue drops, margins compress, key employees leave—buyers will notice. They'll either re-trade to a lower price (citing the decline as justification) or walk away entirely.
I've seen deals fall apart in the final weeks because the seller's trailing-twelve-month numbers looked worse than the numbers used to set the original price. The buyer demanded a 20% reduction; the seller refused; the deal died.
The Fix:
Keep operating as if you're not selling. Maintain your focus on growth, client satisfaction, and employee retention. If anything, run the business better during the sale process. The best deals close when the business is still performing—or even improving.
Mistake #7: Not Getting Professional Help
You built a successful home care agency. That's an impressive accomplishment. But building a business and selling a business are entirely different skill sets. The M&A process has its own language, norms, and pitfalls. Buyers—especially private equity firms and strategic acquirers—do this regularly. For you, it's likely a once-in-a-lifetime event.
The right professional team—an M&A advisor who knows home care, a transaction attorney, a CPA with deal experience—pays for themselves many times over. They know what's market, they've seen the tricks buyers use, and they can push back on unreasonable terms without damaging the relationship.
This is not the place to DIY. The fees you save by going it alone are almost always dwarfed by the value you leave on the table through inexperience.
The Fix:
Interview multiple advisors before engaging one. Ask about their specific experience with home care transactions. Check references from completed deals. Understand their fee structure. The right advisor will more than earn their fee through a higher price, better terms, and a smoother process.
The Good News: Every Mistake Is Avoidable
If you're reading this article, you're already ahead of most sellers. Awareness is the first step. The second step is taking action: understanding your realistic value, identifying your specific readiness gaps, and creating a plan to address them before going to market.
Whether you're planning to sell in 6 months or 6 years, the preparation you do now will pay dividends. Start with a clear-eyed assessment of where you stand today.