In this guide
- The document set a serious buyer asks for
- Why tax returns alone will not carry a sale
- Pulling personal expenses out without losing credibility
- Documenting census and payer mix so a buyer can underwrite them
- How clean books show up in price and closing speed
Key takeaways
- Buyers underwrite trailing twelve months, not calendar years; recent census tells them more than last year's return.
- Tax returns are minimized on purpose, which is why a buyer cannot value your business from them alone.
- Every add-back needs a document behind it. An unsupported adjustment makes the rest of your numbers suspect.
- Census and payer mix are the revenue engine. A monthly log with move-ins, move-outs, rates, and payer source beats a polished summary.
- Clean books shorten diligence, and that is fewer weeks in which a buyer can find a reason to renegotiate.
What does a serious buyer actually ask for?
A trailing twelve-month P&L by month, three years of returns, a census log, the payroll register, and the rent roll — usually within a week of signing an NDA. How fast you produce those five tells an experienced buyer more than the marketing package does. The full request normally runs:
- Monthly profit and loss for the trailing twelve months, plus the prior two full years
- Balance sheet at the most recent month end, and three years of tax returns
- Monthly census by resident, with move-in and move-out dates, rate, and payer source
- Payroll register by pay period, with employed staff separated from agency
- Licence, survey history, plans of correction, and property tax and utility records
Assemble it before you list — this is the same material a buyer works through in due diligence, and having it ready compresses the riskiest phase of the deal.
Why are tax returns alone not enough?
Because you have spent years legitimately minimizing taxable income, and a buyer needs to see economic earnings instead. Returns are annual, backward-looking, and shaped by depreciation elections and timing choices. They also lag: in the spring, your most recent return may describe a period that ended fifteen months ago — and a care home changes a great deal in fifteen months. Three move-outs. A competitor two miles away. A wage increase that reset staffing cost.
Trailing twelve-month statements fix that. They are current, they show trend rather than one blended figure, and they let a buyer see the month occupancy dipped and ask about it. Present both, and where they disagree, explain why before a buyer finds it.
How do you separate personal expenses from the business?
Adjust openly, document every line, and stop commingling the moment you decide to sell. Small care home P&Ls routinely carry owner items: a vehicle, a phone, family health insurance, travel, an above- or below-market owner salary, wages to a relative who does not work in the home.
Handle it with an adjustment schedule beside the P&L, not a P&L you have quietly rewritten. Each row shows the account, amount, period, reason, and supporting document. The schedule must also show what goes back the other way: a market-rate salary for the administrator function, and market rent if you own the building through a related entity.
Three rules keep this credible. Adjust only what is genuinely personal or non-recurring — an expense the buyer will also incur is not an add-back. Support every line with a document. Keep the total modest; more adjustment than profit invites a buyer to discount everything. The mechanics are in how to calculate NOI.
How should census and payer mix be documented?
As a monthly log, resident by resident, going back at least twenty-four months. Most sellers do not have one. For each month, record occupied beds against licensed capacity, each resident's rate, payer source, care level if you charge for it, and every move-in and move-out date. Anonymize names before disclosure, but keep the detail.
That log answers what a buyer would otherwise assume the worst about. Is occupancy stable or drifting? How long do residents stay? Is growth coming from rate rises or from filling beds? How concentrated is revenue — a real risk in a six-bed home, where one departure is a sixth of it?
Payer mix deserves its own line. Private pay, long-term care insurance, and any state waiver or Medicaid programme carry different rates, payment timing, and obligations. Reimbursement rules vary by state and change, so present what you bill rather than a characterization of it. See how occupancy affects value.
How do clean books show up in the price?
Two ways: a higher multiple, and fewer weeks in which the deal can fall apart. Buyers price uncertainty. When earnings are documented and adjustments are supported, the buyer's downside case moves closer to the base case and the offer follows. When the seller produces a shoebox, the buyer discounts for risk or structures around it — a larger holdback, an earnout, a longer diligence period. All three cost real money.
Speed matters as much. A complete package in week one means verification takes a few weeks; reconstructing your financials keeps the buyer in your business for months, and every month is another chance for a lender to reprice or a resident to move out. Given how long care home sales take, removing weeks is real value.
Have someone review the package first
Not ready? Give yourself a quarter: separate the bank account this month, build the census log and adjustment schedule next, gather contracts and licensing records in the third. If margin or occupancy is the real problem rather than the paperwork, spend that window on the operation instead — increasing facility value before selling returns more than any presentation fix.
Either way, have someone who works care home transactions read the package before a buyer does. Get matched with a Buy Sell Assisted Living expert to pressure-test your numbers.
Informational only — not financial, investment, legal, or tax advice. Accounting treatment, reimbursement rules, and reporting requirements vary by state and change over time; work with a qualified CPA who knows care home operations before presenting adjusted financials to a buyer.