Assisted living facility is a special place that families and children entrust people to give care and long term housing for the seniors in their lives, as well as providing personal care support, meals, medication and transportation. Senior care is a business that has been around for a long time, and will continue to be around. If you are considering selling your assisted living facility I am sure that you have asked yourself the question, “What is my business worth?”
A broker can help you find the answer to that question, but understanding the process is always beneficial to you as an owner. After all, your objective is to receive the maximum value for it and in order to do that, you must first understand the many variables that come into play when selling your assisted living facility.
In order to show you the different variables, we have taken data from the last decade of all the assisted living facilities sold in the United States that met our criteria, and broken it down for your further review in order for you to make the right decision on the sale of your business.
What is your assisted living facility worth?
The value of your assisted living facility is correlative to your individual business, the market and what potential buyers are willing to pay. Generally speaking the more services that your business has to offer the higher sales price you are able to ask. So while you are trying to figure out how much your business is worth, here are some questions that should be answered before trying to value your business.
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes an assisted living facility worth more?
When a buyer looks at purchasing your business, they are basically looking at their rate of return on their investment. In other words, when will they recover the money that they spent on the business? In order to show the prospective buyer that their ROI will be high and their relative risk will be low, you should optimize few Key Performance Indicators associated with your assisted living facility.
And while it is true that the profit and sales are considered very important variables when considering the purchase of a business, they are not the only factors that can increase or decrease the value of your business. The following characteristics will give your business better value.
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Volume stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average assisted living facility sell for?
When looking at the graph, the broken down data that we analyzed from the last decade consisted of businesses that range in valuation from $50 thousand to the $10 million valuation range. And these businesses can sell for as much as billions of dollars or as little as a few thousand. You can clearly see the average assisted living facility sold last year in the United States is at 3.61 times earnings, with the average sale price coming in at $643,411.71, with the median sale price coming in at $263.000. All this information is a bit overwhelming without being broken down further, so later in this article we will give you the information needed to be able to start the selling process.
What is the most frequent deal size?
It is harder to pinpoint the most frequently sized deal of assisted living facilities because they range from such different prices ranges. But looking at the graph our most frequently sized deal would be the 0-$250k range. Not to worry if your business does not fall into this category though, there is someone to buy your business and finding the right broker will help.
Is the assisted living facility market getting bigger?
The assisted living facility market is always getting bigger. People are living longer and the population is larger as a whole. There will always be the fluctuations in the market and trends but being able to keep your business stable during those times will give future buyers the assurance that your assisted living facility is a good investment and buy.
Are bigger businesses worth more?
Generally speaking, yes, the bigger your business is, the more that it is worth. Take a look at the image below, as there is an increase in revenue, your multiple becomes higher, which helps generate a better return on your personal investment.
What states have the most assisted living facility business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? California had the largest amount of assisted living facilities sold, which makes complete sense because California is one of the largest states in the country. Don’t become discouraged if you are not in one of the top states though, just because you are in a state with a lesser number of sales doesn’t mean that someone is not looking to acquire a business in your area. Having a broker to help you find a buyer for your assisted living facility no matter what state you are in, can help you successfully sell your business.
Why would you sell in the first place?
When deciding to sell your business, it can become an overwhelming and difficult decision. Your reasons will always be different from the business owner next door. Maybe you are ready for a new venture, or you want to retire. Whatever your reason is, be sure that you have the necessary knowledge and tools to maximize the value of your business.
How long will it take to sell your assisted living facility?
There is not one set timeline for the sale of any business. The variables of the individual business and terms of the sale will define how long it will take to sell. Do keep in mind that generally speaking, the larger deals (over $1 million) take longer to sell, over the smaller deals (under $200k) because of the complexity of the business, in addition to the risk of purchasing a company that large for the buyer. And try to remember, that your individual business will always sell at a different pace than other assisted living facility, and being patient is an essential part in selling.
What is the process of selling your assisted living facility?
Our step by step process will help you become more confident, when you decide to sell your assisted living facility. Many business owners forget or overlook essential steps in the selling process and sometimes become confused and lost throughout the process. If you have questions or concerns about your business’ value or the process in itself please contact us and we will be happy to help.
Who will buy your business?
Finding a buyer can be frustrating and feel like a never ending search, but finding one is essential for the sale of your business. Tuck that frustration and fear aside because there are many options and possibilities. Buyers can range from first time buyers, experienced entrepreneurs, or private equity companies. No matter what the size or maturity of your business there is a buyer for your business, and we can help you find them.
How should I sell my assisted living facility business?
Marketplaces – (under $500k yearly profit)
Smaller business and micro-businesses are usually best sold privately by the owner through forums or classified websites.
To sell your assisted living facility business, check out:
Broker/M&A Advisor – ($500k – $10m yearly profit)
Medium sized businesses in the $100k-$20m are best sold through brokers who help with finding buyers, negotiating and structuring the deal. To sell your assisted living facility business, check out:
Investment Banks – (Over $10m yearly profit)
Larger businesses are best sold through investment banks or merger and acquisition companies. To sell your assisted living facility business, check out:
How much will it cost to sell my assisted living facility business?
Generally a business broker will charge 8-12% of the sales price of an assisted living facility business including inventory depending on the deal size. Larger deals attract a smaller fee. Below is a range of fees at each deal value level.
- Under $1m – 12%
- $1m -$4m – 10%
- $4m -$10m – 8%
- $10m -$25m – 6%
- $25m + – 4%
After reading this article and understanding the necessary steps and processes that come along with the sale of your assisted living facility, and you’ve decided that selling your business is the right decision, we encourage you to have your assisted living facility valuated by a professional broker; this will ensure that you are receiving maximum value for your business. We understand that your assisted living facility is holds tremendous value to you. So when trying to answer that question of what is your business worth, comparing it to the business in the next town over, will not get you the exact answers you seek. When you are ready to take the first step, we will be more than happy to help you find the true value of your assisted living facility, and can help accelerate the sale, by helping you find the right buyer. Feel free to fill out our valuation form and get started right away.