Selling your Skilled Nursing Facility (SNF) is a major decision. In Nashville, the current market presents a significant opportunity for owners who are well-prepared. This guide explores the key market dynamics, valuation principles, and strategic considerations for SNF owners in the Music City. Proper planning is the difference between a good exit and a great one. We believe that understanding your options is the first step.
Curious about what your practice might be worth in today’s market?
Nashville’s Strong Market for Senior Care
The market for healthcare services in Nashville is not just strong. It is booming. As an owner of a Skilled Nursing Facility, you are positioned in a sector with powerful tailwinds. The citys healthcare industry is a nearly $68 billion engine for the local economy. This creates a stable and supportive environment for transactions.
More importantly, the demand for your services is set to grow substantially. Consider these key factors driving the market:
- Statewide Industry Growth: The Nursing Care Facilities industry in Tennessee is on track to become a $3.3 billion market by 2025.
- Favorable Demographics: Tennessee’s senior population is projected to grow by 30% by 2040, reaching 2.1 million people. This demographic shift directly increases the long-term demand for skilled nursing care.
- Active Investment: The region continues to attract investment from both local and national healthcare operators, signaling confidence in the market’s future.
This combination of a robust healthcare economy and increasing demand makes Nashville a seller’s market, but only for those who prepare correctly.
Timing your practice sale correctly can be the difference between average and premium valuations.
Key Considerations for Nashville SNF Owners
While the market overview is positive, a successful sale depends on navigating local challenges. In the Nashville area, buyers will look closely at two specific areas: competition and staffing. The metro area has around 64 skilled nursing facilities, so buyers look for what makes a facility stand out beyond just its census numbers. The most critical factor, however, is staffing. Tennessee ranks among the most challenged states for senior care staffing. This can be a major risk in a sale. Or, if you have built a stable team with low turnover, it can become your single greatest asset. A buyer sees a well-staffed facility not just as a profitable business, but as a de-risked investment. How you tell that story is critical.
Proper preparation before selling can significantly increase your final practice value.
Recent Market Activity Shows Momentum
Thinking about selling can feel abstract until you see that deals are actively getting done. The Nashville market is not just warming up; it is active.
Local Transaction Spotlight
A recent example is National HealthCare Corporation’s (NHC) purchase of Lakeshore Heartland, a 66-bed skilled nursing facility, in May 2023. This kind of transaction shows that established, strategic buyers are confident in the Nashville market and are actively deploying capital to acquire quality assets. Its a clear signal that the window of opportunity is open.
Understanding Buyer Interest
These buyers are not just looking for facilities. They are looking for well-run operations that can be integrated into their larger platforms. They are sophisticated and know what to look for, which is why presenting your facility professionally is so important. When buyers see local activity, it often accelerates their own acquisiton timelines.
Finding the right type of buyer for your practice depends on your specific goals.
The Four Phases of a Successful Sale Process
Selling your practice is a structured process, not a single event. It generally unfolds in four key phases. The most successful sales we see are from owners who start thinking about this process one to two years before they want to exit. It begins with preparation and valuation, where you get your financial and operational documents in order. Next comes confidential marketing, where your advisor discreetly presents the opportunity to a curated list of qualified buyers. The most intensive phase is due diligence. This is where a buyer inspects every aspect of your business. Many deals fall apart here due to unexpected findings. Finally, you move to closing, where legal documents are signed and the transition of ownership occurs.
The due diligence process is where many practice sales encounter unexpected challenges.
How Your SNF is Valued
Your practice’s value is not just a multiple of revenue. Sophisticated buyers base their valuation on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents your facility’s true cash flow. It is calculated by taking your net income and adding back taxes, interest, depreciation, and any owner-related expenses that wont continue under new ownership, like an above-market salary or personal auto lease. This adjusted number is then multiplied by a market-based multiple.
The multiple itself is not fixed. It is influenced by several factors, as shown below.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Staffing | High turnover, agency reliance | Stable team, low turnover |
| Payer Mix | High Medicaid concentration | Strong Medicare & private pay |
| Census | Inconsistent, below 85% | Stable, above 90% |
| Referral Sources | Reliant on one hospital | Diverse referral network |
| Building Condition | Deferred maintenance | Recently updated/renovated |
Understanding how to calculate your Adjusted EBITDA and how to frame these factors is the foundation of achieving a premium valuation.
A comprehensive valuation is the foundation of a successful practice transition strategy.
Planning for Life After the Sale
The moment a sale closes is not the end of the journey. What happens next is just as important. Your after-tax proceeds, your legacy, and your staff’s future all depend on decisions made long before the closing date. Structuring the deal correctly can have huge implications for your tax burden. For many owners, it is also important to ensure the facility continues to provide excellent care and that their long-term employees are protected. This is often accomplished through negotiating specific terms with the buyer. Some owners even choose to retain a part of the business, creating a partnership that allows them to share in the future success. These are complex, personal decisions that require careful planning.
The right exit approach depends on your personal and financial objectives.
Frequently Asked Questions
What is the current market condition for selling Skilled Nursing Facilities (SNFs) in Nashville, TN?
The Nashville market for healthcare and Skilled Nursing Facilities is booming with strong demand driven by a $68 billion local healthcare economy and growing senior population. It is a seller’s market for well-prepared owners.
What are the major factors that influence the valuation of an SNF practice in Nashville?
SNF valuation is primarily based on Adjusted EBITDA, and factors impacting the multiple include staffing stability, payer mix, census percentage, diversity of referral sources, and the condition of the building.
Why is staffing considered a critical factor when selling an SNF in Nashville?
Tennessee faces significant challenges with senior care staffing. A well-staffed facility with low turnover is viewed as a de-risked investment and can significantly enhance the facility’s value to buyers.
What are the key phases involved in the sale process of an SNF practice?
The sale process involves four phases: preparation and valuation, confidential marketing to qualified buyers, due diligence inspection, and closing with legal transfer of ownership. Starting planning 1-2 years in advance is advised.
How can SNF owners plan for life after selling their practice?
Post-sale planning is important to manage tax implications, preserve legacy, and protect staff. Owners may negotiate terms with buyers or retain part ownership to stay involved. Personalized exit planning sessions are recommended.