Why Commission-Based Brokers are the Better Choice for Selling Your Home Care Business
Choosing the right partner to sell your business is one of the most significant decisions you will make as an owner. It impacts not only the final sale price but the preservation of your Legacy. At Home Care Business Broker, led by Managing Directors Matt Lowd and Dave Carlson, we believe that your broker should only succeed when you succeed.
While generalist brokers often charge monthly retainers regardless of results, a commission-based specialist aligns their incentives with yours. Below, we explore why avoiding retainer fees is crucial when navigating a Home Care Valuation or Selling a Hospice.
The Problem with Retainer Fees
In the high-stakes world of healthcare M&A, paying upfront for "effort" rather than "results" is a risky proposition. Retainer-based brokers get paid whether they find a buyer or not. This structure can lead to a lack of urgency. We have seen owners pay thousands in monthly fees while their Patient Census fluctuates, only to be told that the market is "slow."
In contrast, a commission-based model ensures that capital remains in the business—supporting Caregiver Retention and operations—until the deal is closed.
Why Commission-Based Models Drive Better Results
1. Perfectly Aligned Incentives
A commission-based broker is motivated to sell your business for the highest possible price because their compensation is a percentage of the final sale.
Urgency: They work efficiently to close the deal because they don't get paid until you do.
Objectivity: While a retainer broker might advise against an early offer to keep their monthly fees running, a commission broker focuses purely on the quality of the buyer and the terms of the deal.
Outcome-Focused: The goal is a successful exit that ensures Continuity of Care, not a prolonged engagement.
2. Reduced Financial Risk
For small to mid-sized Private Duty agencies, cash flow is king. Paying a retainer is a guaranteed expense with an unguaranteed outcome.
Performance Guarantee: The pay-for-performance model means you essentially outsource the complex sales process—marketing, vetting, and negotiation—without upfront cost.
Protection: If the broker fails to perform, you haven't lost precious capital that could have been used to grow your Medicaid Waivers program or upgrade technology.
3. Maximum Motivation and Accountability
When a broker's livelihood depends on closing the deal, their level of tenacity changes.
Proactive Marketing: Commission brokers aggressively leverage their network to find strategic buyers, rather than waiting for inbound leads.
Negotiation Strength: They are accountable for the valuation. If they promised a high multiple on your EBITDA, they have to work to find a buyer willing to pay it.
Access to Specialized Expertise
Generalist brokers may charge retainers because they lack confidence in their specific industry knowledge. A specialist commission broker knows the difference between Medicare Reimbursement models and private pay structures.
By partnering with a specialist, you gain access to:
Qualified Buyers: A network of private equity groups and strategic buyers looking specifically for home care assets.
Regulatory Knowledge: Understanding of how Certificate of Need (CON) Laws impact transferability.
Deal Structuring: Expertise in structuring deals that protect your staff and patients.
Final Thoughts: It’s Your Decision
Ultimately, the seller holds the power. A broker is there to advise on whether an offer is fair, but you have the final say. By choosing a commission-based partner, you ensure that the advice you receive is driven by the desire to get the deal done right, not to extend the timeline.
Selling a business is grueling and unpredictable. You need a partner who is in the trenches with you, not one who is paid regardless of the outcome.
Ready to Discuss Your Exit Strategy?
At Home Care Business Broker, we don't charge retainers because we are confident in our ability to deliver. Whether you need a Free Business Valuation or simply want to understand the process, we are here to help.
Contact us today to schedule a confidential consultation. Let us help you calculate your worth and take the next step toward a successful transaction.
3. Frequently Asked Questions (FAQ)
Q: Why do some brokers charge retainers? A: Some brokers charge retainers to cover their upfront marketing costs or to ensure the seller is committed. However, in the home care niche, we believe the broker should bear the risk of performance, not the seller.
Q: Does a commission broker cost more in the long run? A: Not necessarily. While the success fee percentage might be higher than a generalist, a specialist broker usually secures a higher final sale price (higher Home Care Valuation), which often nets the seller more money even after fees.
Q: When do I pay the commission? A: The commission is typically paid at the closing table from the proceeds of the sale. If the business doesn't sell, you generally owe nothing.