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Home Health Industry Case Study

  • Industry: Home Health

  • Ownership: Multiple partners

  • Location: Northern United States

  • Payors: Traditional Medicare and Medicare Advantage

  • TTM Revenue at the time of valuation: ~$13.5M

  • TTM Adjusted EBITDA at the time of valuation: $3M or 22.2% 

  • Process Type: Two-stage, Indications of Interest (IOI) followed up by Letters of Intent (LOIs).

    • IOIs:

      • 7 indications of interest received 

      • 3 strategic buyers, 3 PE-backed strategic buyers, 1 financial buyer

      • The highest offer was 93% higher than the lowest offer

    • LOIs

      • 2 letters of intent presented

      • 1 strategic buyer, 1 PE-backed strategic buyer

Challenges Faced 

  • Challenge: The agency had a slowdown in billing, which slowed cash collections. The books followed cash-basis accounting, which meant financial statements did not accurately reflect the agency’s most recent operations. 

  • Solution: The Mertz Taggart team converted their cash-basis financial statements to accrual-basis. This increased Adj. EBITDA by ~$460K or 17.5%. 


  • Challenge: The proposed rule was announced during the due diligence stage of the process. This included a -7.69% reimbursement rate cut and painted a bleak, unknown picture.

  • Solution: The Mertz Taggart team worked to not pause the deal or price-negotiate at the time. This allowed for things to continue to progress, eventually leading to seamless close at the agreed amount in the letter of intent.


  • Challenge: The state agency required a change of ownership (CHOW).

  • Solution: Having transacted in 33 out of the 50 states, Mertz Taggart is no stranger to CHOWs in deal-making and was able to advise the seller during the process.


Benefits of the Transactions 

  • Brought multiple buyers to the table through a competitive two-step process. This allowed the seller to find their ideal buyer and compelled them to make their best offer.

  • Found experienced buyer with complimentary services/ synergies to carry on the success and legacy of business

    • Employee continuity

    • Continuing legacy of patient care in community 

  • Created several millions of dollars of additional value by converting their financial statements from cash-basis to accrual-basis as this increased Adj. EBITDA. 

  • Each partner completed their objectives from the transaction. This involved an equity rollover and a full cash-out.

Home Care Industry Case Study

  • Industry: Home Care

  • Ownership: Single Owner

  • Location: East Coast

  • Payors: Traditional Medicare and Medicare Advantage

  • TTM Revenue at the time of valuation: ~$9M

  • Client Came to Mertz Taggart with buyer and offer in hand


Challenges Faced 

  • Challenge: The agency engaged Mertz Taggart with an offer already in place that they felt was lower than it should be.  

  • Solution: The team used their expertise to negotiate with the buyer on what we viewed as market standard around price, terms, etc. This created a level of trust between the buyer and seller with Mertz Taggart being able to clearly articulate where items would fall on the open market.


  • Challenge: Mertz Taggart representation did not believe the buyer ever intended to pay the earn-out post transaction. The threshold for this earn-out was unrealistically set by the buyer based on historical numbers.

  • Solution: The team negotiated a market standard earn out and was able to set clear targets to enforce the payment. This required working well after close to ensure the payment was made according to the terms


  • Challenge: Mertz Taggart was engaged in September of 2020, amid the pandemic that severely affected the home care business.   

  • Solution: The team had to work through the uncertainty of the impact the pandemic would have on the operation of the business. With our expertise in the Home Care space, we were able to paint a realistic but optimistic picture for the business while setting clear goals for the period after the close.


Benefits of the Transactions 

  • Mertz Taggart was able to negotiate a fair market offer for the business from the single buyer that the client brought to the table. This allowed the client to continue progress and eliminate a lag time that would have been caused by having to take the business to market

  • The team was able to use our financial acumen to demonstrate a clear impact on the transaction due to the pandemic. This gave the buyer faith that once the dust settled we could model the future financials

  • The transaction price was negotiated to 8M from the LOI that would have landed at 5M

Home Care
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