Is Your Assisted Living Facility Ready to Sell?

Pull your current license certificate and verify the expiration date, licensed bed count, and any conditions or restrictions attached to the license. Buyers and SBA lenders will request this on day one of due diligence. A license on probation or with unresolved conditions is a deal-stopper.

Request your complete inspection history from your state licensing agency. Organize reports chronologically and document the corrective action plans (CAPs) you submitted for any cited deficiencies. Buyers will obtain these records independently — having them organized with your responses demonstrates competence and transparency.

If you have any open deficiency findings, substantiated complaints, or pending enforcement actions, work with your licensing agency to close them out formally before listing. Get written confirmation of resolution. Do not go to market with anything open — even a minor citation creates buyer uncertainty and gives them leverage to renegotiate price.

Engage a licensed inspector to conduct a pre-sale facility walkthrough focused on ADA accessibility requirements and fire and life safety codes (sprinklers, exits, smoke detection, fire suppression systems). Document findings and complete any required upgrades. Buyers will conduct their own inspection, and surprises here create price chips or earnout demands.

Some states have updated administrator certification or continuing education requirements in recent years. Verify that your licensed administrator of record (whether you or a hired administrator) meets all current qualifications. If the facility is owner-operated without a separate licensed administrator, hiring and onboarding one now is critical to demonstrating operational independence.

Buyers and SBA 7(a) lenders require three full fiscal years of profit and loss statements, balance sheets, and cash flow statements. Cash-basis bookkeeping is common in small facilities but must be converted to accrual basis for accurate valuation. Engage a CPA with healthcare or small business experience to prepare or review your financials and correct any material errors.

Buyers will scrutinize your payer mix closely. Separate your revenue into private pay, Medicaid, Veterans' benefits, and any other reimbursement sources by year and by month. Facilities with 70%+ private-pay revenue command higher multiples because private-pay rates are more stable and margins are better than Medicaid reimbursement.

Prepare a written SDE recasting schedule that identifies every personal or non-recurring expense run through the business — owner salary, owner vehicle, family member payroll, personal insurance, one-time capital expenditures, and similar items. Each add-back must be documented with supporting evidence. Unsupported add-backs are the single most common cause of valuation disputes during due diligence.

Run a lien search on your business entity and real property. Resolve any UCC filings, tax liens, or outstanding payroll tax deposits before going to market. SBA lenders will not approve financing for a transaction with unresolved tax liabilities or liens on the business or property. These issues also signal financial distress to buyers.

Create a month-by-month occupancy report for the past 24 months showing licensed bed count, occupied beds, occupancy percentage, and revenue per occupied bed. Buyers will model their acquisition financing on stabilized occupancy. Facilities sustaining 85%+ occupancy over 24 months are considered stabilized and command premium pricing.

Prepare a current staffing roster for every employee including full-time and part-time caregivers, the licensed administrator, dietary staff, and any contracted workers. Include each employee's hire date, current hourly rate or salary, certification type and expiration date, and job title. Buyers will use this to model post-acquisition labor costs and assess staffing adequacy.

Organize a complete file for each current resident including the signed admission agreement, current care plan, physician orders, medication administration records (MARs), and any amendments to care level or pricing. Buyers need to understand the contractual revenue base and care obligations they are acquiring. Disorganized resident files are a significant red flag.

Document how your facility actually runs on a day-to-day basis. Include shift schedules, caregiver handoff procedures, medication administration protocols, meal service routines, emergency response procedures, and a vendor contact list with contract terms. This manual is direct evidence that your business can operate without you — which is the single most important thing buyers need to believe.

If you are the primary caregiver, primary scheduler, or the only person who manages family communications and admissions, your business will be valued as an owner-dependent operator — which dramatically reduces marketability and price. Hire or promote a capable assistant director or shift supervisor who can handle day-to-day decisions without you. Step back gradually over 12 months and document the transition.

Review your grievance log and identify any unresolved complaints from residents or families. Consult with your attorney about any pending or threatened litigation. Resolve what you can and disclose what you cannot. Buyers and their attorneys will discover any litigation during due diligence, and surprises late in a process routinely cause deals to collapse or price to be renegotiated downward.

Compile all active vendor contracts including food service, laundry, pharmacy, medical equipment, pest control, landscaping, security, and software subscriptions. Note term lengths, auto-renewal clauses, and any personal guarantees. Buyers need to understand which contracts transfer with the business and which require renegotiation or assignment approval.

If you own the real property, commission a current commercial appraisal from a licensed MAI appraiser familiar with healthcare or special-use properties. Understanding the real estate value separately from the business operations value allows you to evaluate PropCo/OpCo deal structures, which can significantly increase your after-tax proceeds and attract a broader buyer pool.

If you lease the building, pull your current lease and review the assignment clause, remaining term, renewal options, and rent escalation provisions. Buyers need at least 10 years of remaining lease term (including options) to justify an acquisition. If your lease is expiring within 3–5 years with no renewal options, negotiate an extension or new lease with the landlord before going to market.

Assisted living transactions are uniquely complex because of state licensing transfer requirements, regulatory disclosures, and the involvement of healthcare administrators in the approval process. Select an advisor who has closed care home or assisted living transactions in your state — not a generalist business broker. Interview at least three candidates and ask for transaction references from completed healthcare deals.

Work with your advisor to prepare a professional CIM — the primary marketing document buyers will review before signing an NDA and engaging in deeper diligence. The CIM for an assisted living facility should include your licensing history, payer mix, occupancy trend, staffing model, lease or real estate summary, and a 3-year financial summary with SDE recast. Quality of presentation signals quality of operations.

Map out how you will support the new owner through the state licensing application and transition period. Most states require the new owner to submit a new license application with fingerprinting, background checks, administrator qualifications, and facility inspection before the transfer is approved. Plan for 60–180 days of parallel involvement and document your willingness to provide a structured transition in your deal terms.