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Home Care Valuation Guide: What's Your Agency Worth?
Your home care agency's value comes down to one number: SDE. Here's how to calculate it, what drives your multiple, and what agencies like yours are actually selling for.
Home Care
2.5x - 3.1x SDE
12 min read
Updated September 2026
Legend Atty · Founder, BridgeBook
53 businesses sold · $105,000,000+ in total value·Updated September 30, 2026
How to Calculate Your Home Care SDE
SDE stands for Seller's Discretionary Earnings. It is the total cash flow available to a new owner. You start with your net profit and add back certain expenses that are personal to you or won't exist after the sale.
Common Add-Backs for Home Care Owners
- Owner salary above market rate, If you pay yourself $120,000 but a replacement manager costs $65,000, the $55,000 difference is an add-back.
- Personal expenses through the business, Your personal car, cell phone, meals, travel, and any other personal costs running through the P&L.
- One-time or non-recurring costs, Legal fees for a one-time issue, moving expenses, a website redesign, anything that won't happen again.
- Family members on payroll, If your spouse or child is on payroll but doesn't need to be there for the business to run, that salary is an add-back.
Quick SDE Formula
Net Profit + Owner Salary + Personal Expenses + One-Time Costs + Family Payroll = SDE
Then: SDE x Multiple = Business Value
Our free valuation calculator walks you through the SDE calculation step by step and gives you a range based on your specific situation.
What Drives Your Multiple
Private Pay Percentage Is King
Private pay is the single biggest factor in your multiple. Here's why buyers care so much about it:
- Higher margins, private pay rates are typically $25-35/hour vs. $18-22/hour for Medicaid
- Faster payment, families pay weekly or monthly, not 60-90 days like Medicaid
- No government rate risk, Medicaid rates can be cut with little notice
- Simpler billing, no claim denials, no prior authorizations, no compliance audits
- Better client retention, private pay clients tend to stay longer and use more hours
Bottom line: An agency with 70% private pay will sell for a meaningfully higher multiple than the same-size agency with 70% Medicaid.
Other Key Value Drivers
- Caregiver retention rate, Every 10% improvement in your caregiver retention rate makes your agency more valuable. Low turnover means lower recruiting costs, better client satisfaction, and a more transferable business.
- Client hours per week, Buyers look at total billable hours per week as a measure of census health. Steady or growing hours signal a healthy agency. Declining hours is a red flag.
- Recurring Medicaid waiver contracts, While private pay is preferred, Medicaid waiver contracts provide steady, predictable referrals. The key is having both, private pay for margins, Medicaid for volume.
- W-2 vs. 1099 workforce, W-2 agencies get higher multiples. The 1099 model carries legal risk (misclassification lawsuits, IRS penalties) and gives you less control over caregiver quality and scheduling.
- Documented caregiver training programs, A formal training program shows buyers that you can onboard new caregivers consistently. It reduces risk and makes the business less dependent on any one person.
- Google reviews and online reputation, Families research home care agencies online before choosing one. A 4.5+ star Google rating with 50+ reviews is a real asset that drives referrals and client acquisition.
Valuation examples
Here's what home care agencies are actually selling for, based on size and quality:
Small Agency
$200,000
$80,000 SDE x 2.5x multiple
- - 15-20 active clients
- - Mix of Medicaid and private pay
- - Owner involved in scheduling
- - Some 1099 caregivers
Mid-Size Agency
$560,000
$200,000 SDE x 2.8x multiple
- - 40-60 active clients
- - 60%+ private pay
- - Office manager handles daily ops
- - All W-2 employees
Premium Agency
$1,240,000
$400,000 SDE x 3.1x multiple
- - 80+ active clients
- - 75%+ private pay
- - Full management team in place
- - Low turnover, strong SOPs
These are examples based on market data. Your actual value depends on your specific numbers. Get your free valuation to see where you fall.
Common Valuation Mistakes
Using revenue instead of profit
A $2,000,000 revenue agency with $100,000 SDE is worth less than a $1,000,000 revenue agency with $200,000 SDE. Buyers pay for profit, not revenue. This is the most common mistake home care owners make.
Not accounting for caregiver labor costs properly
Some owners undercount labor costs by not including payroll taxes, workers comp, overtime, and benefits. Your SDE calculation needs to use the fully-loaded cost of your caregiver workforce.
Comparing to skilled home health multiples
Skilled home health agencies (Medicare-certified, with nurses) sell for higher multiples than non-medical home care. If you are comparing your valuation to home health deals, you will overestimate your value.
Ignoring caregiver turnover rate
High turnover is expensive, recruiting, training, lost clients. Buyers discount agencies with turnover above 60-70%. If your turnover is high, fix it before you sell. It directly impacts your multiple.
Want an accurate valuation of your home care agency?
Our calculator is built for home care, it factors in payer mix, workforce model, retention, and more.
Frequently Asked Questions
What multiple do home care businesses sell for?
Most non-medical home care businesses sell for 2.5 to 3.1 times their annual SDE (Seller's Discretionary Earnings), with a median near 2.8x, based on sold deals. Agencies with high private pay mix, W-2 employees, and low caregiver turnover sell at the top of that range.
What is SDE for a home care business?
SDE stands for Seller's Discretionary Earnings. It is your net profit plus your salary, plus any personal expenses you run through the business (car, phone, family payroll, personal insurance). It represents the total cash flow available to a new owner.
Why does private pay mix matter so much for valuation?
Private pay clients pay higher rates, pay on time, and are not subject to government rate cuts or billing denials. An agency with 60%+ private pay revenue has better margins, more predictable cash flow, and less regulatory risk, all of which buyers pay a premium for.
Is my home care business worth more than a home health agency?
Not by much. Based on sold deals, skilled home health agencies (Medicare-certified) sell for about 2.2x-3.6x SDE and non-medical home care for about 2.5x-3.1x SDE, with medians near 3.0x for home health and 2.8x for home care. Home health has a wider range, so the best agencies can sell higher. Home care agencies with a strong private pay mix sit at the top of their range because of their margin quality.
How do I increase my home care business valuation?
Focus on growing private pay revenue, reducing caregiver turnover, converting 1099 workers to W-2, documenting all processes, growing your Google reviews, and building referral relationships. These improvements directly increase both your SDE and your multiple.
One important decision. Two good places to start.
What's Your Home Care Agency Worth?
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