Beware the Broker Bait-and-Switch in Home Health M&A: How to Protect Your Agency

By Bruce Vanderlaan, JD, Mertz Taggart

At a Glance

Home health, home care, and hospice owners are fielding more cold calls from M&A “brokers” than ever. Many of these outreach efforts follow the same playbook: promise a specific buyer or a high multiple, lock the seller into an agreement, then flip the script. This is the broker bait-and-switch. It’s designed to generate a fee for the broker, not to maximize value for the seller. Before signing anything, owners should understand how this tactic works, what questions to ask, and why a competitive, seller-focused M&A process leads to a better outcome.

Why Are So Many Brokers Calling Home Health Agency Owners Right Now?

Demand for small- to mid-sized home-based care agencies remains high, even in a volatile M&A market. That demand has attracted a wave of brokers reaching out to agency owners with promises of interested buyers or attractive multiples, all without knowing anything about the business beyond a website.

At the very least, anyone approaching you with promises of “interested buyers” or specific multiples should be cautiously received. If they haven’t done any diligence on your company, their promises are not grounded in reality.

What Is the Broker Bait-and-Switch, and How Does It Work?

The broker bait-and-switch is less a fixed sequence than an opportunistic process. The direction it takes depends on what the broker learns once they get you talking. It typically follows three steps:

Step 1: The Bait.

A broker contacts you claiming to have an interested buyer, multiple interested buyers, or a buyer willing to pay a steep price for your agency. No details are offered. The goal at this stage is not to share information; it is to get you on a call.

Step 2: The Call.

Once you agree to talk, the broker listens as much as they pitch. They are gathering information about your situation, your timeline, and how willing you appear to pay a fee. What you share in this conversation shapes what happens next.

Step 3: The Switch.

Depending on what the broker learns, the approach shifts in one of two directions. If you appear willing to pay a fee, they will ask you to do so, then go out and find a buyer after the fact. If you seem reluctant, they may turn to buyers directly, telling them they have an opportunity and asking whether the buyer will cover the fee instead. In some cases, the broker already has non-exclusive, buy-side arrangements in place with those same buyers, meaning they are positioned to collect from either side. The "specific buyer" from the initial outreach may never have existed.

Sellers, and buyers for that matter, are likely to find this sort of process expensive, confusing, burdensome, and unprofessional. It leaves owners dissatisfied and fatigued at the end of a process they will likely go through only once.

Essentially, the broker is intent on making a fee, regardless of who pays it. A legitimate M&A advisory firm, by contrast, will put significant effort into maximizing value for the seller. There is a lot of work that goes into going to market the right way, ensuring that the agency is ready for due diligence and that the transaction has a high likelihood of closing.

Key distinction: Many of these brokers are “transaction” brokers. They represent the transaction, not you, and not the buyer. A legitimate sell-side M&A advisory firm represents the seller and puts significant effort into maximizing value.

Why Is Having Only One “Interested Buyer” Almost Never in a Seller’s Best Interest?

To avoid succumbing to this trick, the first thing sellers need to understand is that the pressure is not nearly as high as the broker makes it seem. 

Finding buyers is the easy part. 

There are plenty of strategic buyers and PE firms regularly looking for quality home health, home care, and hospice assets. The allure of an “interested buyer” should generally be ignored when no details are given. In fact, having “one” interested buyer is almost never in a seller’s best interest.

When an owner is ready to sell, they should expect a transparent and competitive process from the outset. An experienced M&A advisory firm should engage with multiple qualified buyers to drive the best price and terms.

That also allows the seller—and not the broker, who may just be looking for a fee via the bait-and-switch—to choose the best buyer. That choice will involve price, cultural alignment, certainty to close, post-closing obligations, and a host of other factors.

Without backup offers, buyers are hardly likely to raise their offers or make compromises on other seller wishes. They are also more likely to negotiate on the basis of what is “reasonable” versus what is “market,” determined by a professional, competitive process.

→ Related: Your Company Might Be Great. That Doesn’t Mean It’s Valuable.

What Questions Should Sellers Ask Before Signing a Broker Agreement?

Sellers should not enter into vague agreements, no matter how eager they are to negotiate with so-called “interested buyers.” In order to ensure the process goes smoothly, they need to ask the right questions to the broker:

1. Who is the buyer?

2. Did the buyer specifically ask you to contact us?

3. Why is my company strategically interesting to them?

4. How did the buyer determine the price or multiple that you are claiming?

5. Is the buyer paying your fee?

A respectable M&A advisor should have no problem answering these questions from the start. If they do, they likely do not have the seller’s best interests in mind.

Key Takeaways

• The broker bait-and-switch uses the promise of a specific buyer to generate urgency and move toward a fee arrangement, regardless of whether a real, committed buyer exists at that stage or which side of the transaction will ultimately pay.

• Transaction brokers represent the deal, not the seller. A legitimate M&A advisory firm represents the seller and works to maximize value.

• A single “interested buyer” is almost never in the seller’s best interest. A confidential, competitive process with multiple buyers drives better price and terms.

• Before signing any agreement, ask the five questions above. If a broker can’t answer them, reevaluate.

• Selling your agency is likely a once-in-a-lifetime decision. If you’re being pressured, the answer should be “no.”

Thinking About Selling Your Home Health, Home Care, or Hospice Agency?

This is likely one of the most significant decisions you’ll make as an agency owner—and you only get to do it once. It makes sense to be cautious and informed.

Mertz Taggart is a healthcare-focused M&A advisory firm that has completed over 160 transactions in home health, home care, hospice, and behavioral health. If you’re considering a sale and want to understand what your agency is worth, contact us for a confidential conversation.