Private equity firms have been aggressively consolidating the home care industry for over a decade, and their appetite shows no signs of slowing. In 2025, PE-backed buyers accounted for the majority of home care M&A transactions, with cumulative enterprise value of PE-backed healthcare providers reaching $215.5 billion. If you're considering selling your agency, there's a strong chance a private equity firm—or a PE-backed strategic buyer—will be at the table.
Understanding how private equity thinks, what they're looking for, and how to position your agency for their interest can significantly impact your outcome. This guide explains the PE playbook and helps you evaluate whether a PE buyer is right for your exit.
Why Private Equity Loves Home Care
The home care industry has several characteristics that make it exceptionally attractive to private equity investors:
Demographic Tailwinds
10,000 Americans turn 65 every day. The 75+ population—the primary users of home care—is the fastest-growing demographic segment. This creates predictable, long-term demand growth that PE firms can underwrite with confidence.
Fragmented Market
The home care industry consists of thousands of small, independently-owned agencies. This fragmentation creates a consolidation opportunity: PE can acquire multiple agencies, combine them into a platform, and create value through scale, operational improvements, and synergies.
Recurring Revenue
Home care relationships are ongoing—clients typically need services for months or years. This creates predictable, sticky revenue streams that PE firms value highly. Unlike project-based businesses, home care has built-in revenue visibility.
Reimbursement Stability
Medicare and Medicaid rates, while subject to policy changes, are relatively predictable compared to other healthcare sectors. Private pay rates are market-driven and can be adjusted. This stability supports financial modeling and debt financing.
What PE Buyers Look For
Private equity firms evaluate home care acquisitions through a specific lens. Understanding their criteria helps you assess whether your agency is a fit—and how to position it effectively.
Platform Potential
PE firms typically pursue one of two strategies: acquiring a "platform" company that will serve as the foundation for a regional roll-up, or acquiring "add-on" companies to bolt onto an existing platform. Platform companies need scale ($1M+ EBITDA), strong management, and room to grow. Add-ons can be smaller but need to fit geographically and operationally with the existing platform.
Minimum EBITDA Threshold
Most PE firms need a minimum deal size to make the economics work. For platform acquisitions, this typically means $1M+ EBITDA. For add-ons, the threshold may be lower ($250K-$500K EBITDA), but the agency needs to fit strategically with the existing platform.
Growth Runway
PE firms need to grow the business to generate returns for their investors. They look for agencies with room to expand—whether through geographic expansion, adding new service lines, growing existing payer relationships, or improving operational efficiency. If your agency is already maximized, there's less upside for a PE buyer.
Management Depth
Will key leaders stay post-acquisition? PE firms typically want the existing management team to remain for at least 2-3 years to ensure continuity and execute the growth plan. If you're planning to exit immediately, that's a concern. If you have a strong #2 who can step up, that's valuable. Learn how to build this in our Reducing Owner Dependency guide.
Clean Compliance
Any regulatory issues are deal-killers or result in major discounts. PE firms conduct thorough compliance due diligence, including review of survey history, billing practices, and any pending investigations. A clean record is essential.
Pros and Cons of Selling to Private Equity
Advantages
- Higher multiples: PE firms often pay more than strategic buyers, especially for platform acquisitions, because they can leverage debt financing and have specific return targets.
- Equity rollover opportunity: Many PE deals allow you to "roll" a portion of your proceeds into equity in the new company, letting you participate in future upside when the PE firm eventually sells.
- Professional resources: PE firms bring capital, operational expertise, and professional management resources that can accelerate growth.
- Clear process: PE firms do deals regularly. They have established processes, experienced deal teams, and can move efficiently.
Considerations
- Transition period required: Most PE deals require you to stay on for 2-3 years. If you want a clean exit, this may not be the right fit.
- Culture changes: PE firms professionalize operations—adding reporting requirements, KPI tracking, and corporate processes. This can feel bureaucratic if you're used to running things your way.
- Earnout complexity: PE deals often include earnouts tied to future performance. These can be complex, hard to achieve, and a source of post-closing disputes. See our Earnouts Explained guide to understand how they work.
- Your agency becomes part of a larger strategy: Decisions will be made based on what's best for the platform, not necessarily what's best for your specific location or team.
The PE Playbook: What Happens After They Buy
Understanding the PE playbook helps you evaluate whether their approach aligns with your goals for the business and your employees:
- 1
Acquire Platform
PE firm acquires a larger agency ($1M+ EBITDA) to serve as the foundation for regional consolidation.
- 2
Add-On Acquisitions
Acquire smaller agencies in adjacent markets, integrating them into the platform to build density and scale.
- 3
Operational Improvements
Implement shared services (billing, HR, IT), standardize processes, improve scheduling efficiency, and professionalize management.
- 4
Growth Initiatives
Expand service lines, pursue new payer contracts, invest in marketing and sales, and leverage scale for better vendor terms.
- 5
Exit (3-5 Years)
Sell the combined platform to a larger PE firm, strategic buyer, or take public—ideally at a higher multiple than they paid.
Key Takeaway: Alignment Matters
PE buyers can be excellent partners if your goals align. They typically pay well, move quickly, and bring resources. But understand their playbook: they're building value to sell again in 3-5 years. Your agency becomes a piece of a larger puzzle.
Make sure the deal structure works for your timeline and risk tolerance. If you want a clean exit with all cash at closing, PE may not be the best fit. If you're excited about participating in a growth story and potentially getting a "second bite of the apple" when they sell, PE could be ideal.