How this Entrepreneur Acquired an $8m Home Healthcare Biz

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Today, we’re featuring an ex-consultant who acquired a super profitable home healthcare company for $8m, with no prior acquisition experience. 

And you know the best part? He owns a majority of the business despite investing only $150k of his own capital.

We’ll break down exactly how he did it, including how he structured the deal, financed it, which bank he chose to work with, and more.

Note: He prefers to remain anonymous, so for purposes of this post we’ll call him "Sam". If anyone wants to connect with him to learn more, let us know!

His Story

Sam started his career in consulting but always knew he wanted to be an entrepreneur. While in consulting, he worked on IT implementation projects for financial services and healthcare companies. 

In 2012, Sam left his high paying consulting job to pursue his dreams of entrepreneurship. Over the next 7 years, he tried his hand at several startups, including a medical billing company, a med spa, and a healthcare marketing agency. He was doing fine, but none were a blockbuster success like he had hoped. 

Then in early 2019, Sam had a conversation with a doctor that changed the course of his life. This doctor owned several medical clinics and had partnered with a PE fund to buy a lot more. Later, Sam spoke with his ex-boss (who is now a mentor and investor), and she told him about a trucking business that she had acquired and later sold for 10x the initial purchase price.

He thought, "I'm doing this all wrong", and decided to set his sights on acquiring a business.

He told us, "I knew nothing about acquiring a business at that point", so he read everything he could get his hands on (he recommends reading HBR Guide to Buying a Small Business and Buy Then Build), attended conferences, and learned from people he met in the space. 

A couple years later, he was the owner of a home healthcare business generating $6m in revenue and $1.6m in EBITDA (proxy for cash flow).

Acquisition Process

• Sam’s search took 16 months, from the time he decided to start looking at deals (June 2020) to closing (October 2021)

  • “It took this long because initially I was only looking at deals on a part-time basis.”

• To source deals, he relied on a combination of brokers and marketplaces such as BizBuySell. No cold outreach. 

• Sam looked at trucking deals briefly (driven by initial investor appetite), but quickly pivoted to home care (given his healthcare background)

  • “Home care is one of the fastest growing segments of healthcare and super fragmented.”

• In total, he went through 1k+ listings and signed 3 LOIs

• The business he finally acquired took 6 months to close from the time he submitted an LOI

  • "I sent an LOI the same day I signed the NDA. I spoke with the seller <2 weeks later. Moving fast was a huge advantage in getting it signed up."

  • "It took longer to close than expected due to some financial issues that came up, and because the seller’s attorney hadn’t advised on a M&A deal before."

• Given Sam’s lack of prior M&A experience and larger deal size criteria, he chose to work with an ETA-focused (“Entrepreneurship Through Acquisition”) advisory firm that was “instrumental during diligence and fundraising”

The Business

• Industry: Healthcare / Home care

• Description: Leading home care provider that delivers habilitation training, companion care, daily living support and other services to clients with intellectual and developmental disabilities 

• Established: 2010

• Employees/Contractors: 200+ 

• Acquired Revenue (2021): $6m 

• Acquired EBITDA (2021): $1.6m

Deal Structure

The advisory firm that Sam worked with helped arrange the debt and equity financing, including co-investing in the deal. He said “raising capital was honestly the easy part.”

On the debt side, he spoke with 5 banks and received term sheets from 2 of them (Byline and Live Oak). Sam ended up picking Byline because they gave him the best terms.

How’s It Going

• Revenue has grown 25% per year since acquisition 

• Hiring is the #1 challenge. "If we can hire the right people, client demand is there."

• From a customer acquisition standpoint, the business relies mainly on referrals from case managers. Relationships and reputation are key.

• The other big growth strategy for the business is streamlining client onboarding through process improvements

• Sam is very bullish on the space - he is now looking to grow through add-on acquisitions

Exit Goals

Sam does not have a set time horizon to exit the business but would consider a sale when he can achieve a return of at least 4x for his investors.

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