The Deal Where the Multiple Didn't Decide the Winner
Most conversations about what a home health agency is worth start and end with a multiple. Moses Shmueli, an M&A advisor at Northeastern Advisors, points to a recent transaction where that framework broke down almost immediately.
His firm represented a buyer acquiring a home healthcare agency serving a niche patient population in a highly desirable geographic market. On paper, the agency looked like a business that should trade at or near median industry multiples. In practice, it drew strong interest from strategic buyers looking to expand into that state.
"It was clear early on that the conventional valuation framework wasn't going to decide who won," Shmueli said.
The client recognized that the agency's patient population, referral relationships, and market presence were worth more to them than a generic multiple would suggest, and was prepared to pay a fair price for that strategic value. But price was only part of the offer — and ultimately not the deciding factor.
What set the client apart was everything else. They committed to retaining the agency's caregivers and staff, preserving the agency's name, and continuing the culture and patient relationships the owner had spent years building. They also demonstrated a clear growth plan, the operational resources to support it, and a track record of honoring commitments in prior acquisitions.
The client won a competitive process against another well-capitalized strategic buyer and acquired a platform in a market that would have been difficult and expensive to enter from scratch.
"Valuation multiples tell you what a business might be worth to the market generally, not what it's worth to a particular strategic buyer," Shmueli said. "And for many home health agency owners, the right buyer isn't simply the one with the highest number. Legacy, employee retention, and confidence in how the business will be run after closing can matter just as much."
The Gap Between the Number in Your Head and the Number at Closing
For sellers, the more consequential surprise often arrives during diligence. Shmueli describes a persistent gap between what owners believe their business is worth and how a buyer actually determines value.
Many owners enter the process anchored to a multiple of revenue or a figure they heard from another agency owner. Sophisticated buyers, he notes, focus instead on normalized earnings, how sustainable those earnings are, and the risks of maintaining them after an acquisition. That means close scrutiny of owner compensation, discretionary expenses, staffing, payer mix, reimbursement trends, and how dependent the business is on the owner personally.
"Adjustments that seem perfectly reasonable to a seller don't always survive a buyer's due diligence," he said.
A second surprise is the distance between headline purchase price and what the seller actually receives at closing. Working capital adjustments, escrows, earnouts, and equity rollovers can all materially reduce cash proceeds.
"I've seen owners achieve the multiple they were targeting, then be surprised by how much less cash they received at closing," Shmueli said. "A successful sale isn't simply about negotiating the highest multiple. It's about understanding the deal structure and maximizing what the owner ultimately takes home."
The Mistake Owners Make Before They Have the Numbers
Asked what owners decide too early or the wrong way, Shmueli points to valuation anchoring that happens before any financial preparation.
"The most common mistake I see is owners deciding what their agency is worth before doing the financial preparation needed to support that valuation," he said. Once that expectation is set, he adds, it becomes difficult to have an objective conversation about what the market will actually support.
In home healthcare, two agencies with identical revenue can have dramatically different valuations. An agency operating at a 30% EBITDA margin is fundamentally different from one at 10%, even with the same top line. Profitability is only part of the equation — buyers also weigh payer concentration, caregiver retention, referral sources, regulatory compliance, management depth, and whether earnings can be sustained or grown after the owner exits.
His advice is to hold off on a firm price expectation until normalized earnings and the specific drivers of buyer interest are understood.
"The strongest negotiating position comes from clean financials, a defensible valuation, and a clear understanding of what makes your agency strategically attractive to buyers," Shmueli said.
Practical Takeaways for Owners
- Separate market value from strategic value. A generic multiple describes the market broadly; a specific buyer may assign meaningfully more to patient base, referral relationships, and market access.
- Prepare financials before forming a price expectation. Normalized earnings, not revenue, drive how buyers underwrite a deal.
- Read the structure, not just the headline. Working capital adjustments, escrows, earnouts, and rollovers determine actual proceeds.
- Expect diligence on concentration and continuity. Payer mix, caregiver retention, referral sources, and owner dependence all shape perceived risk.
- Treat legacy as a negotiating asset. For owners who care about staff and community, a buyer's commitment to retention and continuity can carry real weight in a competitive process.
For owners weighing a sale, the through-line in Shmueli's answers is preparation. The number that matters is not the one set at the outset — it is the one that survives diligence and structure. Readers exploring advisory support for M&A transactions in healthcare can review Northeastern Advisors for context on the firm's approach.