The numbers are in, and 2025 was a landmark year for home care mergers and acquisitions. According to Capstone Partners' February 2026 sector update, 104 announced or completed transactions closed in the home care sector during 2025, representing a 40.5% increase over 2024. Mertz Taggart's Q4 2025 report counted 105 total transactions across home-based care. Either way, the message is clear: buyer appetite for home care agencies has surged to levels not seen since the pre-pandemic peak. Plan your exit timing with our exit timeline calculator.
For agency owners considering an exit in 2026, this data carries significant implications. More deals mean more comparable transactions for valuation benchmarking, more active buyers competing for quality assets, and a market environment that generally favors sellers. But the data also reveals important nuances about which segments are attracting the most attention, what buyers are prioritizing, and where the market may be headed.
Key Takeaway for Sellers
Deal volume surged 40.5% in 2025, driven by PE firms deploying record dry powder and strategic buyers expanding geographic footprints. If you've been waiting for the "right time" to explore an exit, the market data suggests 2026 offers a strong window, particularly for agencies with clean financials and diversified payer mixes.
2025 Deal Volume: The Full Picture
The 40.5% year-over-year increase in deal activity wasn't a single quarter anomaly. Transaction volume was strong throughout the year, with Q2 and Q4 each recording 26 transactions according to McKnight's Home Care. The sustained pace reflects a fundamental shift in buyer confidence, driven by declining interest rates, greater regulatory clarity following the CMS 2026 Home Health Final Rule, and a growing recognition that home-based care is a durable, demographically-driven growth sector.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Total Transactions | 74 | 104 | +40.5% |
| Strategic Buyer Deals | 46 | 61 | +32.6% |
| PE-Backed Deals | 28 | 43 | +53.6% |
| PE Platform Investments | 6 | 11 | +83.3% |
| PE Add-On Acquisitions | 22 | 32 | +45.5% |
Source: Capstone Partners Home Care Sector Update, February 2026.
Deal Activity by Segment
Not all segments of the home care market moved in lockstep. Understanding where deal activity concentrated helps agency owners assess how their specific business type is positioned in the current market.
Personal Home Care: The Volume Leader
Non-medical personal care agencies led dealmaking with 59 transactions in 2025, a 43.9% increase year-over-year. The segment benefits from powerful demographic tailwinds as more seniors prefer to age in place, combined with relatively lower regulatory barriers compared to Medicare-certified agencies. Private equity firms have been particularly active in this segment, building regional platforms through add-on acquisitions of local operators. For owners of non-medical home care agencies, this means there are more potential buyers actively looking for acquisitions than at any point in the past five years.
Home Health: Surging After Regulatory Clarity
Medicare-certified home health agencies saw the most dramatic increase, with 51 transactions representing a 75.9% year-over-year jump. This surge came despite the CMS proposing a steep 6.4% payment cut mid-year, a proposal that was ultimately softened to a 1.3% aggregate reduction in the final rule. The resolution of that uncertainty unlocked a wave of deals that had been on hold. Investors placed premium valuations on home health operators with strong referral relationships, measurable clinical outcomes, and diversified payer mixes that reduce Medicare dependency.
Hospice: Selective but Strong
Hospice M&A activity grew to 34 transactions, up 21.4% year-over-year. The segment benefited from a 2.6% increase in the Medicare hospice payment rate effective October 2025. However, buyers remained highly selective, prioritizing operators with strong documentation integrity, healthy referral diversification, and disciplined length-of-stay management. Regulatory scrutiny, particularly in enhanced oversight states like California, Arizona, Nevada, and Texas, made compliance readiness a prerequisite for premium valuations.
| Segment | 2025 Deals | YOY Change | Key Driver |
|---|---|---|---|
| Personal Home Care | 59 | +43.9% | Demographic demand, PE platform building |
| Home Health | 51 | +75.9% | CMS final rule clarity, value-based care |
| Hospice | 34 | +21.4% | Payment rate increase, compliance focus |
Source: Capstone Partners, February 2026. Note: Some transactions span multiple segments.
Who Was Buying in 2025?
Strategic buyers completed 61 transactions in 2025, maintaining a 58.7% share of overall activity. Public strategic acquirers were notably more active, completing 20 transactions versus just 7 in 2024. Companies like Addus HomeCare, The Pennant Group, and Amedisys (now part of Optum following the $3.3 billion acquisition that closed after a two-year regulatory review) continued to expand their geographic footprints and service capabilities.
Private equity activity expanded even more dramatically, with 43 deals representing a 53.6% year-over-year increase. The most telling statistic is the 83.3% jump in new platform investments, from 6 in 2024 to 11 in 2025. Each new platform represents a PE firm entering the home care space with a mandate to acquire and integrate multiple agencies over a 3-5 year hold period. These newly-established platforms are now actively seeking add-on acquisitions, creating a larger pool of motivated buyers for agency owners considering an exit. For a deeper analysis of how PE firms evaluate agencies, see our guide on Private Equity in Home Care.
What Drove the Surge?
1. Interest Rate Declines Improved Buyer Economics
The Federal Reserve's rate cuts in late 2024 and through 2025 meaningfully improved the economics of leveraged acquisitions. Lower borrowing costs mean buyers can pay higher multiples while maintaining their return targets. According to PwC's 2026 Health Services Deals Outlook, the more constructive financing backdrop is expected to continue supporting transaction velocity into 2026.
2. Regulatory Clarity After the CMS Final Rule
The CMS CY 2026 Home Health Final Rule, finalized on November 28, 2025, resolved months of uncertainty. The initial proposed 6.4% aggregate reduction was softened to a 1.3% cut ($220 million decrease from 2025 levels), according to CMS. This provided investors with the certainty needed to underwrite and model performance for home health acquisitions. Several deals that had been paused pending the final rule closed quickly in Q4 2025.
3. Demographic Demand Is Undeniable
The aging of the baby boomer generation continues to drive demand for home-based care services. Over 10,000 Americans turn 65 every day, and the overwhelming preference is to receive care at home rather than in institutional settings. This demographic tailwind provides a durable growth story that attracts both strategic and financial buyers. Unlike many healthcare sectors where growth depends on market share gains, home care benefits from an expanding total addressable market.
4. PE Dry Powder Near Record Levels
Private equity firms entered 2025 with near-record levels of uninvested capital. According to DLA Piper's 2026 healthcare PE outlook, several factors are expected to support continued PE activity in 2026, including greater clarity around earnings, a more favorable regulatory environment, and pressure from limited partners to deploy capital. Home care's fragmented market structure, with thousands of small operators, makes it an ideal sector for PE consolidation strategies.
What This Means for 2026 Sellers
The record deal volume in 2025 creates several favorable conditions for agency owners considering an exit in 2026.
More Buyers Means More Competition for Your Agency
With 11 new PE platforms established in 2025, each actively seeking add-on acquisitions, the buyer pool is larger and more competitive than it has been in years. When multiple qualified buyers are interested in your agency, you have leverage to negotiate better terms, whether that means a higher multiple, more favorable earnout structures, or better post-closing employment arrangements. Understanding current valuation multiples is essential for setting realistic expectations and recognizing a strong offer when you see one.
Transaction Comparables Are Stronger
More closed transactions mean more data points for valuation benchmarking. When your advisor can point to 104 recent comparable transactions, it strengthens the case for your asking price. Conversely, in years with fewer deals, buyers have more room to argue that market conditions are uncertain and push for lower valuations.
The Window May Not Stay Open Indefinitely
While the outlook for 2026 remains positive, M&A markets are cyclical. Interest rates could reverse course, regulatory changes could create new uncertainty, or a broader economic downturn could reduce buyer appetite. The current combination of favorable financing, regulatory clarity, and strong buyer demand represents a window that prudent owners should take seriously. As our analysis of the signs you're ready to sell explains, the best exits happen when owners act from a position of strength rather than waiting until they're forced to sell.
Preparing for a 2026 Exit
If the 2025 deal data has you thinking seriously about an exit, the time to start preparing is now. Use our exit timeline calculator to build your personalized exit roadmap. Buyers in this market are sophisticated and selective. They're paying premium multiples, but only for agencies that demonstrate clean financials, strong operations, and growth potential. Our comprehensive guide on how to prepare your agency for sale covers the full 12-month roadmap, but the most impactful steps you can take immediately include:
Recast your financials. Calculate your adjusted EBITDA by identifying and documenting all legitimate addbacks. This is the single most important number in any transaction, and buyers will scrutinize it heavily during due diligence.
Reduce owner dependency. Agencies that can operate without the owner's daily involvement command significantly higher multiples. Start building your management team and documenting your processes now. Our guide on reducing owner dependency provides a practical framework.
Clean up your compliance. With regulatory scrutiny increasing, particularly in hospice and in enhanced oversight states, buyers are placing a premium on agencies with strong compliance infrastructure. A clean survey history and robust compliance program can add 0.5x to 1.0x to your multiple.
Understand your payer mix. Agencies with diversified revenue streams, combining Medicare, Medicaid, private pay, and managed care, are more attractive to buyers than those dependent on a single payer. If your payer mix is concentrated, explore opportunities to diversify before going to market.
Where Does Your Agency Stand?
The 2025 deal data shows that buyers are actively looking for quality home care agencies. Find out where your agency falls in the current market with a confidential valuation estimate and exit readiness assessment.