Guide to Selling an Assisted Living Facilities (ALFs) Practice in Texas

The market for Assisted Living Facilities (ALFs) in Texas is currently one of the most active in the nation. A rapidly growing senior population and a favorable business climate have created significant demand from buyers. For owners, this presents a unique window of opportunity. However, turning that opportunity into a successful sale requires strategic preparation. This guide provides a direct look at the market, key financial drivers, and the steps involved in navigating the sale of your facility.

A Market Defined by High Demand

The conditions for selling an ALF in Texas are strong, driven by powerful and sustained trends. Understanding these forces is the first step in positioning your practice for a premium valuation.

Demographic Tailwinds

Texas is a magnet for retirees, and its 65+ population is one of the fastest-growing in the country. This demographic surge directly fuels the need for quality senior care. As a result, 7 out of 10 people will require ALF care in their lifetime. Occupancy rates are reflecting this, with overall senior living occupancy climbing past 84% and continuing to rise. For sellers, this means your facility is not just a business; it is a critical piece of infrastructure in a high-demand sector.

A Welcoming Investment Climate

Beyond demographics, Texas’s business environment adds another layer of appeal. The absence of a state income tax makes it an attractive location for both facility residents and the private equity groups and strategic buyers looking to invest. This creates a competitive acquisition landscape where well-run facilities command significant attention.

3 Key Areas Buyers Will Scrutinize

A strong market brings motivated buyers, but it also brings sophisticated ones. These groups look past the surface and dig deep into the fundamentals of your operation. Getting these three areas right is critical.

1. Your Regulatory Standing. In Texas, buyers will immediately verify your license type (Type A or Type B) and your compliance history with the Texas Health and Human Services Commission (HHSC). A clean record is non-negotiable and serves as a green light for deeper conversations. Any past issues must be documented and resolved.

2. Your Operational Excellence. Buyers are not just acquiring a building; they are acquiring a functioning care provider. They will analyze your staffing ratios, management team’s experience, and your ability to care for residents with common conditions like dementia or mobility challenges. This is where the story of your facility27s quality of care is told.

3. Your Financial Health. While profitability is key, sophisticated buyers look closer. They assess your payer mix24the balance between private pay and Medicaid24to understand revenue stability. A higher percentage of private pay residents is often seen as more desirable and can lead to a higher valuation.

Market Activity Shows Strong Momentum

The theoretical demand for Texas ALFs is translating into real-world transactions. The state is a focal point for M&A in the senior care sector, with both regional and national buyers actively seeking opportunities.

A Transaction-Rich Environment

We are seeing a consistent flow of deals across the state. Major advisory firms have announced billions in sales volume in Texas, and large operators like Sagora Senior Living have acquired entire portfolios of facilities. This is not a market of hypotheticals; it’s a market where deals are closing, from single facilities to large platforms. Private equity remains the dominant force, bringing significant capital and a clear strategy for growth.

What Sophisticated Buyers Want

Today’s buyers are looking for more than just stable occupancy. They are placing a premium on facilities with proven avenues for growth. This could be physical space for expansion, opportunities to add higher-acuity services like memory care, or a strong reputation in the local market. Demonstrating this upside potential is key to attracting the most competitive offers.

Understanding the Sale Process

A successful sale doesn’t happen by accident. It follows a structured process designed to protect your confidentiality, create a competitive environment, and maximize your final value. While every deal is unique, the journey typically follows four key stages.

1. Preparation and Positioning. This is the work done before your facility is ever shown to a buyer. It involves gathering at least three years of clean financial records, organizing compliance and licensing documents, and preparing a professional valuation. This phase sets the entire foundation for the sale.

2. Confidential Marketing. Your facility is marketed discreetly to a curated list of qualified buyers. We don’t just “list” your practice. A proper M&A process involves running a confidential, competitive process with a proprietary database of buyers to create tension.

3. Navigating Due Diligence. Once a serious buyer is engaged, they will conduct a deep dive into your financials, operations, and legal standing. This is often the most intense phase of a sale and where an experienced advisor is critical to manage the flow of information and prevent deal fatigue.

4. Negotiation and Closing. The final stage involves negotiating the definitive purchase agreement, which covers everything from the final price to the terms of the transition. Our role is to ensure the legal and financial terms are structured in your best interest.

How Your Assisted Living Facility is Valued

One of the first questions any owner asks is, “What is my facility worth?” For ALFs, the answer is a blend of business performance and real estate value. Buyers look at your profitability through a specific lens called Adjusted EBITDA. This isn’t just your net income; it’s your earnings after adding back owner-specific expenses to show the true cash flow potential to a new owner.

This Adjusted EBITDA figure is then multiplied by a number based on market conditions, your facility’s size, and its risk profile. Larger, more profitable facilities command higher multiples because they are seen as more stable investments.

Your valuation is also influenced by the underlying real estate, which is typically assessed using a capitalization (cap) rate. For ALFs in Q1 2025, this averages around 7.6%.

Here are typical valuation multiples for the business operations based on size:

Getting a professional valuation is the only way to truly understand what your ALF is worth in the current market. It combines the math with the market narrative to arrive at a defensible price that attracts the right buyers.

Planning for Life After the Sale

The day you close the deal is not the end of the journey. A successful transition is one where you are prepared for what comes next, both financially and personally. Thinking about these issues early in the process is one of the most important things you can do.

1. Structuring Your Payout. The final sale price is not the same as the cash you will have in the bank. The deal structure has major tax implications. Furthermore, buyers may propose an earnout (where a portion of the price is paid later based on performance) or an equity rollover (where you retain a minority stake). We help you model these scenarios to understand your true net proceeds.

2. Protecting Your People and Legacy. You have likely spent years building a dedicated team and a reputation for quality care in your community. A key part of the negotiation process is ensuring the new owner will be a good steward of that legacy. This includes understanding their plans for your key employees and their commitment to resident care.

3. Planning Your Next Chapter. Selling your ALF is a major life event. Having a clear plan for your personal and financial future allows you to enter negotiations with confidence. Whether it is a full retirement or a new venture, knowing your goals helps us structure the ideal exit for you.