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Are Home Healthcare Businesses Good Investments? What About Future Growth?

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Comments & Replies: 2     Views: 6492     Posted By: Peter Siegel MBA  Peter Siegel MBA: BizBen Founder, ProBuy/ProSell Program Director

A buyer contacted me about financing (the purchase of) a home health care business and asked me about the future of this industry - I take on this question with other Users And Intermediaries on BizBen regarding the home health care industry and it's future for potential buyers.

Topics: Buying A Business     Tags: buying a business



At one point in time, everyone has been reminded how important it is to respect our elders. From minding our p's and q's in our youth, to eventually giving back and taking care of loved ones who supported us in our upbringing, there are many different ways to show appreciation for our elders. There comes a point in life when many will depend on others to meet their every day needs, and rely on support for tasks that once came easily to them. A booming industry that values quality service to others, while enjoying healthy profits is the home healthcare industry.

The home healthcare industry is rapidly expanding and will continue to see vast growth into the 3rd decade of the 21st century. By 2020, there will be 5 million people in the United States ages 65 and older. When members of the baby boomer generation look to retire and seek home healthcare, professionals in the field will look to cash in. When looking for a business to buy in this industry, there are a few factors that a buyer should be aware of that can influence the rest of the buying process. As mentioned before, the market is booming so there will be plenty of competition to look out for. Additionally, most business in the home healthcare industry are sold as asset sales to help minimize the exposure to litigation during the sellerís era of ownership. In a field that may have added risk due to the clientele that is served, research into past incidents during the due diligence period are crucial to minimize the risk of walking into a bad business deal with hidden problems. Lastly, a potential buyer needs to be prepared for the constant need to hire new employees, as this industry sees a high turnover rate of employees. While it is incredibly rewarding work, it can also take its toll on the very people who are tasked with helping those in need.

When buying a home healthcare business, the value of the business goes far beyond the price tag. An appropriate price to pay for your new business can be found in the range of 4-7 times the current ownerís earnings before interest, taxes, depreciation, and amortization (EBITDA), or 2-4 times the sellerís adjusted net income.

After finding a price that you are willing to pay, you should know that SBA financing is commonly available for 75% of the total cost, by way of a 10-year loan. If you donít have a lot of money to spend on the remaining cost, seller financing in this industry in popular in the range of 10-25%. This means that you aren't necessarily required to have the full sum in your pocket, and can pay off your financial loans while you are enjoying healthy profit in the ballpark of 20 percent, which is an industry standard. Financing and having the costs covered by second and third parties is one of the many perks of purchasing a business in the home healthcare industry.

Replies To This Comment
 
Contributor: Broker/Consultant: Elderly Care Services  Post ID: 1146
Yes., home health care business's are solid investments and can provide a nice return on investment.

But, before you jump in with both feet make sure you take into consideration the following:

* Rising Employee wages and associated costs
* Increased licensing and government oversight
* Employee management and cost of ownership
* Competition, how many other home health agency's are in your area?
* Demographics, what's the Client base look like?

Again, yes this is a great business, and it's a growing industry as our Baby Boomers come along, just make sure you do your homework before diving in.



  Helpful Resources To Assist In Selling And Buying California Businesses
Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.

George Lanza, Business Broker, At Plethora Business Sales

Plethora Businesses, a division of A Premier In Services, Inc., is a Business Intermediary Consulting Firm headquartered in Orange, California. Plethora specializes in the listing and sale of small and medium sized private businesses.

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Laundry specialists - founded in 1968 by three laundry professionals, PWS is a family-owned corporation. Through the years it has grown to become the largest vended laundry equipment distributor in the United States. Call Brad Steinberg at 323-721-8832 to sell or buy a coin or card laundromat.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Timothy Cunha, J.D., Business Broker, Northern California

Having managed and sold several businesses of his own, Tim offers business sellers extensive personal experience and professional expertise in building business value, planning a successful exit strategy, "packaging" and promoting the sale, and coordinating a successful sale. 844-237-6487 Toll Free.

Mani Singh, Business Broker, Southern California

I have successfully represented clients sell & acquire multitude of businesses ranging from Gas Stations, Liquor Stores, Markets, Super Markets, Smoke Shops, Postal Stores, Restaurants, General Retail, Auto and Construction related. Phone me for assistance with selling or buying at 951-296-7646 Cell

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.


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