Buying or selling a placement or care-management business

Identify the services and the person being served

List the target's actual activities: housing information, placement referrals, assessment, coordination, advocacy, monitoring or other services. Identify the client, the person signing the agreement, the payer and the provider receiving any referral. These roles can be held by different people or organizations.

ALCA describes care management as professional support involving assessment, planning, coordination and advocacy. That description helps distinguish service work from a placement event; it does not establish that every business using the term has the same qualifications. (Source: Aging Life Care Association)

Prepare a separate operating description for each activity before discussing valuation. Explain the work performed, who is responsible, when payment is earned and what obligations remain. A combined revenue total can conceal materially different staffing, collection and legal requirements.

Separate payment models before analyzing margin

Build schedules for placement fees, assessments, hourly services, retainers and other material receipts. Identify contractual rates, qualifying events, cancellations, refunds, discounts and collection history. Allocate shared costs consistently so that one service line does not appear profitable only because another absorbs its expenses.

For placement revenue, connect the referral to the agreement and qualifying event. For professional services, connect the invoice to documented work under the service agreement. A prospective placement or anticipated assignment should remain separate from historical earned fees.

Ask the accountant to explain the accounting basis and treatment of unearned payments or disputed amounts. The transaction team should understand both sustainable earnings and the cash required to finish work. An attractive margin based on receipts can change once obligations to clients, staff or providers are recognized.

Review law and professional standards as separate questions

Identify the jurisdictions served and the actual activity in each. Determine whether state referral-agency rules, professional licensing, privacy duties, consumer protections or payment restrictions apply. Do not infer a nationwide permission or prohibition from one state's statute.

Washington's elder and vulnerable adult referral agency act provides a useful scoped example. It defines paid referral activities and exemptions, then addresses disclosures, records, provider checks, fees and other duties. Read the target's services against those definitions before applying individual provisions. (Source: RCW 18.330)

Professional association standards are a different layer. ALCA's 2024 standards address referral compensation and separate related businesses. Verify the people and practices to which those standards apply rather than treating association membership as a universal state license or assuming a state-compliant contract resolves all professional obligations. (Source: ALCA standards 21–23)

Assess whether combined operations are supportable

A seller may describe placement and professional care management as complementary revenue streams. Before valuing shared staff, systems, branding or referrals between them, have the actual structure reviewed against applicable law, contracts and professional commitments. The fact that two services help the same family does not settle whether they can share a business model.

ALCA's standards prohibit referral fees and similar arrangements within the Aging Life Care practice and require independent, separate operation of a related referral-fee business in the circumstances they describe. Do not treat a second company name alone as proof of compliance. Obtain a specific assessment of the proposed arrangement and any claimed operating efficiencies.

Show separately which earnings the buyer can continue under a supported structure. If a proposed integration requires different staffing, systems or marketing arrangements, include the cost and timing. Do not price a transaction around savings that conflict with the professional model the buyer intends to maintain.

Trace a placement fee from inquiry to collection

Follow a sample of completed cases through the inquiry source, intake, required disclosures, relevant provider agreement, referral, qualifying event, invoice, collection and any later adjustment. Protect client information and use an appropriately authorized review process. Expand the sample when exceptions suggest a broader issue.

Identify duplicate claims, disputes about who made the referral, prior provider relationships, cancellations and payments received outside the usual terms. A large invoice does not prove that the contract's conditions were met. Determine who resolves the dispute and whether the balance belongs in the acquisition forecast.

For a fictional example, eight earned fees of $4,000 total $32,000. If documented adjustments for that same group total $5,000, the net amount is $27,000 before operating costs and other adjustments. These invented amounts are not market commissions or a statement that any particular fee is lawful. Collections may occur in a different period.

Review disclosures and conflicts through actual files

Read the disclosure forms used with clients and compare them with agreements, websites and practice. Determine how compensation, relationships, scope of service and client choices are explained. A policy in a manual is incomplete evidence if case records do not show that it was used at the required time.

Washington's statute requires specified disclosure before referral, including fee information and relevant ownership interests. It also addresses the client's ability to stop using the agency and restricts exclusive agreements within its scope. Those are concrete review questions for a Washington target, not a template for every jurisdiction. (Source: RCW 18.330.020 and .050)

Explain how staff handle a recommended provider that has a relationship with the agency or its owners. The acquisition analysis should preserve client choice and evaluate conflicts directly. Do not describe a provider network as comprehensive or objective without evidence supporting those representations.

Reconcile refund and payment restrictions

Review refund terms, complaints, historical adjustments and pending events by case and payment source. Identify the responsible entity and the amounts potentially due. Distinguish a contractual refund from a statutory obligation; an agreement cannot be assumed to override applicable law.

Washington's statute requires a prorated refund for specified death, hospitalization or more-appropriate-care transfer events within the first thirty days of supportive-housing admission. It also separately restricts remuneration for referrals involving items or services payable under the cited Medicaid chapter. Confirm the actual scope with counsel before treating a fee as collectible. (Source: RCW 18.330.090 and .130)

Keep these issues separate from pricing assumptions. No standard commission percentage or refund reserve is supplied here. A buyer needs a supported estimate of obligations based on the target's cases, agreements and applicable requirements, with unresolved matters clearly identified.

Understand provider verification and network quality

Determine how staff learn about available services, payment sources, qualifications, capacity and provider status. Review how information is updated and how a referral's suitability is assessed by the appropriate people. A provider appearing in a database does not establish current availability or fitness for a particular client.

Washington's act specifies provider contact and information gathering, updating and enforcement-status searches within its scope. Review evidence of the actual process, rather than assuming a signed network agreement satisfies all duties. (Source: RCW 18.330.070)

For acquisition analysis, distinguish an active provider relationship from an obsolete contact. Examine completed cases, response history and agreement status. The buyer should fund the work necessary to maintain accurate information and appropriate recommendations instead of treating the network as an asset that requires no ongoing attention.

Analyze professional time and service commitments

For care-management work, compare the agreement's scope with recorded service time, travel, coordination, documentation and urgent availability. Identify which work is billable and which supports delivery without a separate charge. A billed hourly rate is not the same as revenue for every employee hour.

Use consistent definitions when calculating utilization. In a fictional week, 30 total working hours with 18 supported billable hours represents 60 percent billable utilization under that definition. At an invented $150 billed rate, those 18 hours produce $2,700 before adjustments and collection timing. Neither the utilization nor the price is a recommended workload or market benchmark.

Review whether the forecast funds nonbillable responsibilities, supervision, leave and backup. Service quality and appropriate professional judgment must guide caseload decisions. A spreadsheet should not prescribe client capacity or remove needed coordination merely to achieve a margin target.

Verify qualifications and founder replacement

List the work performed by the founder and each team member. Separate business management from services requiring particular professional qualifications or authority. Review credentials with the appropriate issuing bodies and identify limitations relevant to the activities actually delivered.

The owner-replacement-cost definition helps translate duties into an explicit buyer operating model. A buyer who personally performs qualified work has different economics from one hiring professional and administrative coverage. Do not remove the seller's compensation while leaving necessary work unfunded.

Determine which relationships are managed by a team and which depend on the founder's personal reputation or availability. Introductions, documentation and a supported transition can help, but they cannot guarantee that clients or referral partners will remain. Keep proposed retention assumptions visible in the valuation and cash forecast.

Inspect marketing channels without treating contacts as owned demand

Review inquiry sources, websites, phone numbers, advertising accounts, referral relationships and any purchased lead arrangements. Establish ownership, administrative access, transfer conditions and the right to use information after closing. Historical access to an account does not necessarily establish transferable control.

Reconcile source-level inquiries to meaningful contacts, appropriate cases, completed work and collections. Remove duplicates and inactive records from the analysis where the evidence supports doing so. Compare acquisition cost with a consistently defined net-revenue or contribution measure, not with the highest advertised fee.

Use the referral-concentration guide to identify dependence on a small number of organizations or relationships. Multiple contacts at one institution can represent a single economic dependency. A buyer should test the effect of losing that source without assuming that a noncompetition clause or database purchase preserves future decisions.

Preserve information through a lawful transition

Client circumstances, family communications and health details can be sensitive even when the business is not itself a HIPAA covered entity. Determine applicable privacy, consent, contractual and professional duties before granting buyer access. An NDA is useful for confidentiality but does not create every required legal authority.

Washington's referral statute addresses six-year records retention and certain client-identifying health information within its scope. HHS guidance applies to covered situations under its own framework; names removed from a file do not necessarily make it de-identified. Keep the two legal analyses distinct. (Sources: RCW 18.330.040, HHS)

Assign custody, authorized access, correction, retention and secure disposal responsibilities. Review vendor agreements and system exports. The buyer needs a plan for current service information and the seller's historical obligations, with client communication appropriate to the actual relationship and governing requirements.

Review working capital and valuation on a supported basis

Reconcile receivables, unearned retainers, refunds, payroll and other obligations. Identify who earns pre-closing work, who collects it and who completes pending tasks. Review subsequent collections and disputed balances before treating every invoice as cash available to fund the purchase.

Prepare historical earnings, supported adjustments and future scenarios separately. SBA's business-purchase guidance supports investigating finances and operations with appropriate advisers; it does not establish a multiple for a placement agency or a professional practice. (Source: SBA)

Compare offers through funding, qualifications, agreement continuity and transition responsibilities as well as price. If revenue depends on retaining particular people or obtaining consents, show the dependency explicitly. Price adjustments or contingent consideration require suitable advice and should not be treated as a substitute for resolving whether the proposed services and payments are permissible.

Make the first operating week specific

List pending referrals, scheduled services, urgent client needs, billing tasks, staff coverage and escalation contacts through an appropriately controlled handoff. Identify who will respond if the founder is unavailable, a key professional leaves or a system fails. Confirm that the team has the necessary authority, information and resources.

Use the placement and care-management diligence checklist to record evidence, unresolved issues and responsible reviewers. The intended result is a transferable operating process supported by qualified people and honest financial assumptions, while preserving clients' choices and the obligations owed to them.