Understanding Your Transaction Details Is Key to Making a Deal

Health care mergers and acquisitions (M&A) grew more than 50% in 2021 compared to 2020. A significant portion of these M&A activities derived from consolidation and private equity roll-ups and more is anticipated in 2022, especially if market forces compel health care providers to sell, coupled with payment adjustments from the Centers for Medicare & Medicaid Services (CMS). Home health agencies (HHAs) are no exception to the growing health care M&A market, as more prospective suitors seek attractive deals in home health care due to the increasing emphasis on health care services outside of inpatient settings and anticipated increased CMS payments for home health services in 2022.

While the objective may sound elementary, each party should ask themselves why they are engaging in the transaction. Is the buyer’s goal to grow the business for a period of time (e.g., three to five years) and then sell it to a third party, or is the buyer acquiring the HHA to operate it long term? Depending on the reason, the strategies and mindset may differ based on the objective for the transaction.