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Home Care M&A: A Banner Year for Dealmaking, with Franchisor Transactions Taking Center Stage

Updated: Dec 14, 2023

With at least 56 transactions announced so far, 2021 has proven to be a banner year for non-medical home care dealmaking. That’s especially true when it comes to franchisor transactions, with private equity and strategic buyers alike attracted by the often difficult-to-find scale of today’s top networks.

“Before 2021, you could count the number of franchisor transactions the previous five years on one hand,” Mertz Taggart Managing Partner Cory Mertz says. “Private equity loves the industry, but have had a hard time finding targets with scale, and more strategic buyers want to own all three legs of the home-based care stool, from home health and hospice, to non-medical supportive care services.”

The increased activity around franchisors doesn’t mean other home care businesses have gone overlooked, however.

In July, for instance, Denver-based health care services company ModivCare Inc. (NYSE: MODV) acquired CareFinders Total Care LLC for a whopping $340 million.

“I wouldn’t be surprised if we saw another large franchise company hit the market in 2021,” Mertz says. “I expect a strong finish for this year."

A change of pace

Before 2021, home care franchises saw just a handful of noteworthy transactions.

The previous uptick in franchise M&A activity took place in 2015 and 2016, when Los Angeles-based PE firm Levine Leichtman Capital Partners completed its acquisition of Caring Brands International and Linsalata Capital Partners bought Home Helpers. Right at Home was also acquired by North Carolina-based Investors Management Corporation, the PE group behind Golden Corral and Fleet Feet Sports, in 2016.

In contrast, as of December 1, multiple home care franchisors have sold in 2021. The headliners include Senior Helpers, Home Helpers, Home Instead , Caring Brands International and, finally, Executive Care.

“Senior Helpers got the ball rolling in April, after it was purchased by Advocate Aurora Enterprises, the investment arm of the Advocate Aurora health system,” Mertz says.

According to at least one report, Advocate’s deal valued Senior Helpers at roughly $180 million, or roughly 14 times the franchisor’s 2020 EBITDA.

About a week after Senior Helpers revealed its sale, Chicago-based private equity firm RiverGlade Capital acquired H.H. Franchising Systems Inc., the company that operates Home Helpers. Financial terms were not disclosed.

“With its strong performance in the home care market and talented leadership team and staff, we saw an opportunity in Home Helpers Home Care in which our investment could continue to fuel growth,” Danny Rosenberg, managing partner at RiverGlade, said in a press release. “We recognize the great company that has been built at Home Helpers Home Care and look forward to working with [CEO Emma Dickison] and team.”

Next came the deal that Mertz calls “the shocker this year”: Honor buying Home Instead.

Honor originally launched as a home care technology platform that connected clients and caregivers. Over the past few years, it pivoted to a partnership approach with existing home care agencies.

The next step in Honor’s evolution was to acquire greater size and scale, allowing it to maximize its technology. It did just that in August by landing Home Instead, a home care franchise with 1,200 locations across the U.S. and 14 other countries.

Financial terms of that deal weren’t disclosed, but the result of the transaction was a combined enterprise with $2.1 billion in home care services revenue, according to the companies.

In October, private equity firm Wellspring Capital Management struck a deal to acquire Caring Brands International, the parent company of Interim HealthCare, Bluebird Care and Just Better Care. While financial terms weren’t disclosed, Caring Brands was expected to command a low-double-digit EBITDA multiple.

Wellspring also has a minority stake in Help at Home. It previously owned Great Lakes Home Care Services as well, giving it plenty of home care experience.

“We have been strong advocates of high-quality home-based care providers that enable seniors, individuals with medically complex care needs, and others with disabilities to live independently in their homes,” Naishadh Lalwani, a partner at Wellspring, said in a press release announcing the news. “Caring Brands International and their franchisees and operators have developed a stellar reputation of empowering individuals to live life on their own terms and we are excited to partner with [CEO Jennifer Sheets] and team to continue to grow that mission.”

Finally, in November, The Riverside Company announced its acquisition of Executive Care. Founded in 2012, Executive Care operates a network of 13 franchise locations.

“Executive Care has a long track record of success in providing high-quality, non-medical home care support through its network of franchise partners,” said Riverside Senior Partner Joe Lee. “We look forward to working closely with the Executive Care team to build additional value in the business through organic and acquisitive growth.”

Riverside adds Executive Care to its existing Best Life Care franchise network, which owns and operates ComForCare and At Your Side Home Care franchisors.

Building scale

One of the trickiest aspects of home care M&A is the industry’s highly fragmented nature. Simply put, there aren’t too many multi-state or regional home care companies out there.

“Franchisor deals do come with scale, though, which is partly why we’re seeing more deals this year,” Mertz says.

While franchise dealmaking is up, general interest in home care has also increased because payors, health systems and others see the value of addressing activities of daily living (ADLs) and social determinants of health (SDoH).

In the past, it was important to have home health and hospice capabilities, where organizations can send clinicians or caregivers in the home to handle a medical emergency or adverse health event. Now, diversified in-home care providers and others want to care for patients from pre-acute to end of life, which means having some sort of non-medical home care division.

Just the beginning

While multiple home care franchisors have changed hands, several potential acquisition targets remain. Additionally, even as the public health emergency improves, health care organizations will continue seeking new capabilities focused on ADLs and supportive care.

“We’ve really seen the true value of home care since the start of the COVID-19 pandemic,” Mertz says. “The focus on non-medical home care is a long-term trend. This is just the beginning.”

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