Senior Care Due Diligence Checklist for Buyers

Define the business before requesting files

Write a short outline of the proposed purchase. Name the buyer and selling entities, locations, services, assets and property rights. State whether the offer concerns assets, shares or another ownership interest. Identify which cash, receivables, debt, deposits and contracts are expected to move. Mark the points the parties have not settled.

Use that outline across the deal team. An accountant reviewing one entity and a lender funding another may reach answers that do not fit together. Adding the building or excluding old receivables can change the funding plan. Ask which earlier conclusions need another review when the sale scope changes.

Also define what must work on the first day. The buyer needs a lawful operating plan, qualified people, access to premises and records, and money for the work. A seller who will cover an important duty needs an agreed role and cost. The LOI guide helps turn those assumptions into questions for the proposed terms.

Give every request a purpose and a reviewer

Set up a request log with the question, needed record, responsible adviser, access limit and due date. Use clear statuses such as requested, received, under review, issue open and decision recorded. A file should move to received when it arrives. It should not move to resolved merely because someone uploaded it.

For the earlier screening decision, use the marketed-business evaluation guide to choose which claim needs a focused review. Its fictional earnings bridge separates the seller's claim from a conditional buyer case. An open lease question then shows how a specific record can change the comparison.

Choose one person to coordinate requests. Advisers still make their own findings within their scope. A shared log helps avoid asking the seller the same question in several forms. Keep the response, its date and any later correction beside the question in the data room.

Trace revenue from service to cash

Begin with the same entity and periods across the accounts. Ask the accountant to explain the accounting basis and reconcile the ledger with the financial statements. Then connect revenue to completed hours, visits, occupied units, resident charges or earned fees, as the model requires. A deposit alone does not show when a service was earned.

IRS guidance explains the role of supporting records for income, expenses and other business entries. It also addresses electronic records. The transaction tests here are a separate review framework; the IRS does not certify an acquisition checklist or approve an earnings adjustment. (Source: IRS supporting records.)

Follow receivables through a period. The next table uses invented agency figures for one month and a single invoice ledger. Receipts relate only to those invoices. The example excludes deposits, cash sales and changes in bad-debt allowances; credits are reductions to the invoice balances.

The bridge is $75,000 + $240,000 − $210,000 − $5,000 = $100,000. This proves only that the listed arithmetic balances. It does not prove that the new invoices were earned or that the unpaid balances will be collected. Check service support, disputed charges and later receipts separately.

Use AR aging by payer to examine the unpaid amounts. Keep a slow but collectible balance separate from a denied or disputed charge. Ask which period and invoice each later receipt belongs to before treating cash after closing as proof of earlier revenue.

Test adjustments against the work a buyer must fund

Ask for a bridge from reported profit to the proposed earnings measure. Each earnings add-back needs an amount, source account and reason. Check that the cost was actually in the starting figure and has not already been removed elsewhere. Include necessary new costs as well as expenses that may go away.

For a separate fictional annual example, reported profit already deducts $30,000 for a limited owner task. The buyer will spend $22,000 to replace that same task. The net improvement for this item is $8,000, calculated as $30,000 − $22,000. The replacement figure includes the payroll burden assumed for this task. This is not a full owner-pay schedule or a market wage.

Review all other owner duties on their own evidence. Scheduling, oversight and urgent calls may require different people and costs. Keep projected growth and buyer-specific savings apart from historical earnings. A plan to reduce costs is not proof that the seller already earned the larger amount.

Check operating authority and contracts separately

List the licenses, certifications, payer enrollments and major contracts for each entity and site. Ask counsel what the proposed change requires. Keep the answer tied to the actual service, ownership history and current rules. A label such as asset sale or stock sale does not finish the review.

Distinguish the stages of an approval. A submission receipt, a complete application, a decision and an effective date are different facts. Keep the supporting record for each. A landlord consent does not establish Medicare enrollment, and a payer relationship does not replace a state license.

The licensing overview is a starting framework. Obtain the location and program requirements for this deal before fixing a closing sequence. If the plan depends on interim seller support or management, ask counsel to assess that arrangement before anyone relies on it.

Review people, service quality and property together

Compare staff schedules with payroll, outside labor invoices and the services delivered. Identify vacancies, leave, overtime, supervision and work done by the owner or family. A report can show lower labor costs while the business depends on unrecorded work. Fund the coverage the buyer will actually need.

Qualified operating or clinical reviewers should assess the required roles and the service plan. Review surveys, complaints, incidents and corrective work through lawful access. Separate an old resolved issue from an open or recurring one. A written plan is not proof that a correction was carried out or maintained.

For premises, review the lease or title, permitted use, condition, major equipment and needed repairs. Identify who owns each asset and who prepared a cost estimate. A fresh coat of paint does not establish that building systems are sound. Required work belongs in the funding and operating plan.

Environmental work needs its own dated scope. The Phase I exercise shows a recent cover, an older interview and missing component dates. The file needs qualified professional review of the underlying work. It provides no finding about contamination. It also does not decide building condition or the buyer's legal protection.

For a focused asset-record check, the equipment and lender-lien FAQ compares two fictional lifts with a release draft. One sale identifier has no matching entry in that draft. Use the mismatch to assign the missing document question before carrying the equipment list into the final handoff.

If the seller retains the building, read the proposed lease alongside the business earnings. The OpCo/PropCo guide explains how rent connects the two analyses. Keep required notices, safe service and permission to use the property ahead of a desired closing date.

Use an evidence path that respects privacy

Begin with summaries suited to the question. Ask the privacy lead what further detail can be shared, with whom and under what safeguards. An NDA sets contractual duties; it does not supply every legal basis for disclosure. Removing names alone does not establish de-identification under HHS guidance. (Source: HHS de-identification.)

HHS's minimum-necessary guidance has a defined scope and exceptions. It is not an identical rule for every use or disclosure. FTC business guidance separately supports limiting access to sensitive data. Neither source certifies a chosen data-room product or makes all of its uploads appropriate. (Sources: HHS minimum necessary; FTC data protection.)

If records cannot yet be lawfully supplied, leave the finding open. Ask whether a specialist review or prepared summary would answer it and what limits would remain. Do not contact staff, clients or referral sources outside the agreed process. Keep private files out of ordinary booking forms.

Follow the relevant care-model checklist

The core review organizes the purchase. The detailed tests depend on the services and duties within it. All eleven routes below lead to different operating questions. A campus or mixed agency may need several reviews, with shared staff, costs and entity relationships reconciled between them.

For example, continuing-care resident promises and restricted funds need their own review. A placement fee needs support for what service earned it and any continuing duty or refund. Do not force both into a checklist built only around visits or beds.

Record the decision and refresh it before closing

Write what was claimed, what was verified, what remains uncertain and why it matters. Assign the next action and the evidence that would resolve it. A response may involve verified corrective work, changed economics, a contract protection or a decision to stop. The relevant adviser should assess whether that response addresses the actual issue.

Refresh facts that may change before transfer, including trading results, staff coverage, claims, contracts, cash and approval status. Keep the review date on each conclusion. An answer about an earlier month should not become an assurance about the closing day without new evidence.

The diligence-timeline exercise compares fictional package deliveries with a later cost question. Accounts and lease records arrive before the payroll register. Use it to separate receipt from work still under review. The example does not fix or restart the agreed deadline.

SBA purchase guidance supports examining the records and using professional advice. This guide turns those broad topics into practical questions; it does not replace an engagement with those advisers. Use the red-flags guide for conflicting evidence and the first-90-days plan for agreed handoff tasks. (Source: SBA purchase guidance.)

For two focused workpapers, use the buyer data guide to reconcile activity, billing and receipts, and the buyer referral guide to examine attribution and relationship dependence. Carry their unresolved findings into this checklist.

The background-registry example separates a dated identity match, an unmatched search and earlier waiver evidence. Assign each open question to an authorized reviewer without distributing workers’ underlying criminal-history details through general deal materials.