An owner’s guide to navigating the market, understanding value, and preparing for a successful transition.
Selling your Skilled Nursing Facility (SNF) is one of the most important financial decisions of your career. In Oklahoma City, the current market presents unique opportunities for well-positioned owners. This guide provides a clear overview of the local market landscape, key valuation drivers, and the strategic steps involved in a successful sale. Proper preparation is the foundation of a successful outcome, whether you plan to sell next year or in the next five years.
A Look at the Oklahoma City SNF Market
The decision to sell doesn’t happen in a vacuum. It is heavily influenced by market conditions. For SNF owners in Oklahoma City, the current environment shows promising signs, backed by strong fundamentals that appeal to sophisticated buyers.
Economic Tailwinds
Oklahoma City’s economy is showing solid momentum, particularly within the health services sector. This growth directly supports the SNF industry by ensuring a steady stream of patient referrals and a robust local healthcare ecosystem. Paired with strengthening overall renter demand, the broader real estate market signals stability and potential for continued growth. This economic health makes OKC an attractive location for investors looking for stable, long-term assets.
Operational Landscape
Oklahoma is known for having long-term care costs that are lower than the national average. This can be a strategic advantage. It allows facilities to operate more efficiently while still providing high-quality care. With 287 licensed facilities across the state, the market is established but not overly saturated. This creates a competitive, yet healthy, environment for well-run operations to stand out and capture buyer attention.
What Buyers Scrutinize Beyond the Balance Sheet
When buyers evaluate your Skilled Nursing Facility, they look at more than just revenue and occupancy rates. The story behind the numbers is what often drives premium valuations. Your facility’s reputation in the Oklahoma City medical community, your relationships with referring hospitals, and your track record for quality of care are immense assets. These are not just points of pride. They are quantifiable value drivers.
Another critical area is your staff. In an industry facing staffing challenges, a facility with low turnover and a team of experienced, dedicated caregivers is a significant prize. Buyers see this as a de-risked investment and a sign of a healthy, sustainable operation. Likewise, a clean regulatory history with the Oklahoma State Department of Health (OSDH) is non-negotiable. Proving you meet and exceed standards is a powerful selling point.
What We’re Seeing in the Market Today
The theoretical value of your facility meets reality in the transaction market. In Oklahoma City, the activity shows a clear and compelling pattern. Understanding these trends is key to timing your sale correctly.
Here are a three key trends defining the current M&A landscape for SNFs in the area:
- Private Investors are Leading the Charge. For years, private investors and investment groups have been the most active buyers in the Oklahoma City market, making up over 90% of transactions. These are sophisticated buyers looking for well-run facilities with stable operations. They have the capital to close deals efficiently when they find the right opportunity.
- Significant Transactions are Happening. This is not just a theoretical market. Real deals are being done. For example, the 150-bed Bellevue Health & Rehabilitation facility in Oklahoma City was acquired in 2023 for $10.7 million. This shows that substantial capital is being deployed for quality assets in the area.
- Buyers are Investing in the Future. That same Bellevue transaction included funds for capital improvements. This is important. Buyers are not just acquiring a business. They are investing in its future growth. If your facility has a strong foundation, buyers see the potential and are willing to pay for it.
Navigating the Path to a Successful Sale
A successful sale is not an event. It is a process. Many owners think the hardest part is finding a buyer. In our experience, the most critical phase is the preparation and management of the sale itself. It starts with organizing your financial records, employee contracts, and compliance documents into a clear, professional package.
The due diligence phase is where most deals face challenges. Buyers and their lenders will scrutinize every aspect of your operation. Being prepared for this intense review can prevent surprises and keep the process on track. We believe in running a structured, competitive process. This is different from just listing a practice. It creates competitive tension among qualified buyers, ensuring you are negotiating from a position of strength and finding a partner who is the right strategic fit for your legacy.
Understanding the True Value of Your Facility
Valuation is more than a formula. It is about understanding what a buyer is willing to pay for your future cash flow. Most owners look at their net income, but sophisticated buyers value your practice based on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This metric reveals the true earning power of your facility by adding back non-operational or personal expenses.
Many owners are surprised to learn their practice is worth significantly more than they thought. The difference comes from this normalization process. Here is a simple example.
| Financial Metric | Amount | Description |
|---|---|---|
| Reported Net Income | $500,000 | The “bottom line” on your P&L. |
| Add: Excess Owner Salary | +$150,000 | The portion of your salary above the market rate. |
| Add: Personal Expenses | +$50,000 | Costs like a personal car lease run through the business. |
| Adjusted EBITDA | $700,000 | The true cash flow a new owner can expect. |
This Adjusted EBITDA is then multiplied by a market-specific number to determine your practice’s value. The multiple itself depends on factors like your size, reputation, and growth prospects.
Life After the Sale: Structuring Your Legacy
Closing the deal is not the end of the story. For many owners, a primary concern is what happens to their facility, their staff, and their legacy. A well-structured transaction does more than just maximize your financial return. It protects what you have built. You do not have to simply hand over the keys and walk away.
Modern deal structures offer flexibility. An equity rollover, for instance, allows you to retain a minority stake in the new, larger company. This gives you a “second bite at the apple,” enabling you to share in the future success you help create. Strategic partnerships and earnouts can also be designed to keep you involved at a level you are comfortable with. The right deal structure ensures a smooth transition for your team and gives you confidence in the future of the facility you built.
Frequently Asked Questions
What are the current market conditions for selling a Skilled Nursing Facility in Oklahoma City?
Oklahoma City’s SNF market is favorable in 2024, supported by a strong local economy, especially in the health services sector. This environment provides a steady stream of patient referrals and indicates stability and potential growth, making it an attractive location for investors.
What factors do buyers consider beyond financials when purchasing a Skilled Nursing Facility?
Buyers look at several qualitative factors including the facility’s reputation in the local medical community, relationships with referring hospitals, quality of care, staff stability and experience, and a clean regulatory history with the Oklahoma State Department of Health (OSDH). These elements are critical as they contribute to a premium valuation and reduce investment risk.
How is the value of a Skilled Nursing Facility typically determined?
Value is often derived from Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which normalizes earnings by adding back excess owner salary and personal expenses. This adjusted figure is then multiplied by a market-specific multiplier based on facility size, reputation, and growth potential. This method reveals the true earning potential beyond just reported net income.
What is the significance of market timing and preparation when selling an SNF in Oklahoma City?
Successful sale outcomes depend heavily on timing and preparation. Organizing financial records, employee contracts, and compliance documents beforehand facilitates a smooth due diligence process. Understanding market trends and creating competitive tension among buyers ensures you negotiate from a position of strength and align with the right buyer strategically.
What options are available to owners regarding involvement after selling their Skilled Nursing Facility?
Owners can structure deals to retain involvement through mechanisms like equity rollovers, which allow them to keep a minority stake, strategic partnerships, or earnout arrangements. These options enable owners to stay engaged at a comfortable level, share in future growth, and help ensure a smooth transition that protects their legacy and staff.