Memory Care Business Due Diligence Checklist

Establish the operating model before requesting a valuation

Identify whether memory care is a standalone facility, a unit within assisted living, part of a nursing facility or another licensed arrangement. List the operator, property owner, locations, capacity and service lines included in the sale. Review the license itself rather than relying on a commercial description.

Collect advertising, the admission package, resident agreements and service descriptions. Compare what the facility promises with what it is authorized and equipped to provide. Identify any distinction between general supportive services and a specifically marketed dementia-care program.

The buyer should explain the intended post-closing model. If the plan changes the resident population, service level, physical layout or capacity, assess those changes separately. The seller's current authority does not automatically establish approval for the buyer's expansion concept.

Build a state-specific licensing and rule checklist

Request current licenses, endorsements or specialty authorizations where applicable, administrator credentials, inspection records and agency correspondence. Determine which ownership, management, name, capacity or use changes require action. Keep a separate entry for each relevant authority.

Florida's 2026 section 429.076 creates a memory care services license framework with requirements tied to implementing rules. Its pathways depend on the rules' effective date and the facility's licensing date, with specified conditions and exceptions. This requires careful timing review rather than a generic assertion that every facility is already licensed under the new framework. (Source: Florida section 429.076)

The Florida transition guide explains the questions to verify. In California, review the RCFE ownership process when that is the actual license category. These examples do not establish the requirements in another state.

Reconcile the resident census with the revenue records

Obtain monthly resident counts, move-ins, move-outs, room availability, fee schedules, concessions, refunds, deposits and collections. Compare the information with the general ledger and bank receipts. Explain temporary absences, billing holds and other differences in the period being measured.

Use the occupancy-rate definition to keep capacity assumptions consistent. A room, a bed and a resident are not always equivalent units. Identify shared rooms, offline spaces and any beds unavailable because the facility lacks staff or approvals.

Separate base accommodation charges from service-level charges and other fees. Review what the resident agreement permits and what the facility actually collects. Do not substitute a new prospect's advertised rate for every existing resident's contracted rate.

Inspect the staffing model across the full week

Review rosters, schedules, payroll, agency staffing, turnover, vacancies and management duties. Look at nights, weekends and absences as well as ordinary daytime staffing. Ask how the operation maintains continuity when a familiar employee leaves or an unexpected need arises.

Map specialized knowledge held by the owner or a small group of employees. If those people depart, the buyer needs a qualified replacement plan with compensation, recruiting time, training and backup. Avoid treating necessary replacement work as free simply because it is not separately described in the seller's income statement.

Compare the staffing proposal with the actual resident population and the applicable requirements. A forecast built from a target labor percentage needs independent operating support. This review does not prescribe a universal ratio or judge a resident's care needs.

Ask qualified reviewers to examine the resident-support model

The Alzheimer's Association's professional recommendations emphasize care organized around the individual and address workforce, environment and transitions. Use that framework to ask how the facility understands residents and maintains continuity; it is not a nationwide licensing rule or an endorsement of the target. (Source: Alzheimer's Association Dementia Care Practice Recommendations)

Have qualified reviewers assess relevant policies, training and actual practice through an appropriate records-access process. Ask how the operation identifies changing needs, communicates concerns, reviews incidents and coordinates with outside professionals. A brochure or completed training roster alone cannot demonstrate how staff respond in practice.

Translate supported findings into responsibilities and costs. If additional training, supervision or a policy change is needed, identify who will implement it and how it will be funded. The financial team should not make clinical judgments to preserve a desired margin.

Compare marketing promises with contracts and operations

Review claims about specialized programs, staff credentials, activities, safety features and availability of support. Identify the evidence for each material claim. Remove assumptions that depend only on an oral explanation or an outdated advertisement.

Consider whether post-closing changes would affect residents' agreements or require notices, consents or approvals. Counsel should evaluate the actual documents and governing requirements. Do not promise families that every service or staff member will remain unchanged unless the transition plan supports that statement.

Rule changes can also affect advertising terminology. Florida's new framework expressly directs rules on terms used without a memory care services license. The current rulemaking status and effective requirements must be verified for the transaction. (Source: Florida AHCA memory-care rulemaking)

Review the property as a care environment and an investment

Obtain the lease or ownership documents, permitted-use information, condition reports, maintenance history and relevant safety-system records. Qualified property and care professionals should assess whether the environment supports the authorized operation and identify necessary work.

Do not assume a secured entrance or a dedicated wing proves suitability or compliance. Ask who evaluates and maintains systems, how staff are trained, and which proposed modifications require approval. Technical and clinical conclusions belong with the qualified reviewers.

Separate recurring maintenance from immediate repairs and longer-term capital needs. If work affects usable capacity, include the effect in the occupancy and cash forecast. HUD's residential-care financing materials reinforce the need for project-specific property and operator underwriting; they do not guarantee financing for this deal. (Source: HUD ORCF)

Inspect management qualifications and continuity

Identify the administrator, care leadership, scheduling, finance and resident-communication responsibilities. Confirm which credentials apply and who holds them. California CDSS, for example, treats RCFE administrator certification separately from facility licensing. (Source: CDSS administrator certification)

Document whether key employees intend to remain and what terms are required. A retention discussion is different from an agreed commitment. The buyer should understand the cost and risk of replacing essential leadership before assigning value to owner independence.

Protect private information during the sale process

Initial commercial review can use aggregate occupancy, staffing and financial information. Identify the lawful basis, purpose and safeguards for any necessary resident-level review. HHS minimum-necessary guidance applies to relevant protected-health-information disclosures; other privacy obligations may also apply. (Source: HHS minimum necessary)

Keep resident stories, identifiable photographs and detailed circumstances out of blind marketing. A transaction does not make residents into promotional evidence. Plan authorized records access and custody with counsel, including what happens if the buyer withdraws.

Turn findings into conditions and a transition budget

Summarize the verified license pathway, supported earnings, necessary staffing, property work and unresolved issues. Distinguish confirmed costs from estimates and identify the evidence still needed. A price adjustment may address some financial findings; it cannot replace required authority or a workable resident-support plan.

Model operating cash after paying the purchase price and closing expenses. Include deposits, resident-account treatment, recruitment, training and any interruption associated with property work. Reconcile the budget with the lender's assumptions and the purchase agreement.

Use the first 90 days guide to assign responsibilities for staff, records, vendors and communication. A clear handoff starts before closing, with an incoming team that understands the service commitments it is taking on and the resources needed to honor them.