Guide to Selling a Skilled Nursing Facilities (SNFs) Practice in Virginia

Selling your Skilled Nursing Facility (SNF) in Virginia involves navigating a landscape of complex regulations, specific market dynamics, and a new wave of buyer expectations. This guide offers a clear overview of the current environment, from market trends and valuation drivers to the key steps in a successful sale process. Understanding these factors is the first step toward achieving your personal and financial goals in a transition.

Market Overview

The Virginia market for Skilled Nursing Facilities presents a dual reality for owners considering a sale. On one hand, overall healthcare spending in the state continues to rise, fueling interest from a diverse range of buyers, from private equity groups to regional operators. On the other hand, a successful transaction requires a deep understanding of the Commonwealth’s specific rules.

A Shifting Landscape

Buyer appetite is strong, but they are more sophisticated than ever. They look past the surface and focus on quality metrics, operational efficiency, and a facility’s position within its local market. This is not a market where you can simply list your practice and hope for the best. A strategic approach is necessary to attract the right kind of attention.

Virginia’s Unique Factors

Two elements heavily influence SNF sales in Virginia.
1. Certificate of Need (CON) Laws: These regulations control the development and expansion of healthcare facilities, impacting supply and demand. Understanding how your facility fits within the regional CON framework is a key part of your sale narrative.
2. Medicaid Reimbursement: With Medicaid rates playing such a significant role in financial performance, buyers will heavily scrutinize your payer mix and the impact of Virginia’s specific payment programs, like the Nursing Facility Value-Based Purchasing Program.

Key Considerations for Virginia SNF Owners

Before you even think about valuation, sophisticated buyers will analyze the core operational health of your facility. Being prepared to answer detailed questions in these areas is not optional. Your readiness here directly impacts deal viability and value. Here is what buyers focus on:

1. Regulatory and Compliance History. Buyers will perform deep diligence on your inspection history with the Virginia Department of Health and CMS. A clean record from the mandatory state and federal surveys is a major asset. Any past violations need a clear and resolved narrative.

2. Staffing and Quality of Care. Your CMS Star Rating is a public benchmark of your facility’s quality. Buyers will connect your staffing levels and clinical outcomes directly to your financial performance. They understand that strong quality scores often lead to better financial results.

3. Financial Transparency. Be prepared to open your books. Prospective buyers will want a clear breakdown of your revenue streams, particularly your Medicaid reimbursement rates and how your facility performs under value-based purchasing programs.

4. Local Reputation. In a competitive landscape, your facility’s reputation among residents, families, and local healthcare providers is a significant intangible asset.

Market Activity and Timing

The national market for skilled nursing facilities has seen record-setting transaction volume recently, and Virginia has been an active participant. We’ve seen strategic acquisitions by players like WLC Management and significant portfolio sales, such as the Bon Secours Mercy Health post-acute divestiture. This high level of activity indicates that well-run, strategically positioned Virginia SNFs are in high demand.

However, timing the market is about more than just selling when buyers are active. It is about being fully prepared when that window of opportunity opens.

This alignment of market conditions and seller preparedness is what leads to premium outcomes.

The Sale Process Unpacked

Many owners think selling a practice is like selling a property. You list it and wait for offers. In reality, a successful M&A process is a managed, confidential project designed to create a competitive environment and protect your interests. At SovDoc, we run a process that ensures you are in control.

Here are the typical phases:

1. Preparation and Valuation. This is the foundational stage. We work with you to analyze your operations, clean up your financials to calculate an accurate Adjusted EBITDA, and build a compelling narrative about your facility’s potential.
2. Confidential Marketing. We do not “list” your practice. We identify and discreetly approach a curated list of qualified strategic and financial buyers from our proprietary database who are the best fit for your facility and goals.
3. Managing Bids and Negotiations. We create competitive tension among interested parties to drive up the value and improve the terms of the deal. We manage all communications and help you compare offers.
4. Due Diligence and Closing. This is where many deals fail. We manage the flow of information during the buyer’s rigorous investigation to prevent surprises and ensure a smooth path to the closing table.

Getting to Your True Valuation

Your practice is likely worth more than you think. But its true value is not your net income or a generic industry multiple. The starting point for any serious conversation with a buyer is a metric called Adjusted EBITDA.

The Power of Adjusted EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a proxy for cash flow. Adjusted EBITDA takes this a step further. We analyze your financials to add back one-time or owner-specific costs that a new owner would not incur. Things like above-market owner salaries, personal vehicle expenses, or a one-time major repair are added back to your bottom line. This simple but critical step can often increase your practice
9s perceived earnings by 25% or more, significantly raising its valuation.

The Multiple is Your Story

That Adjusted EBITDA figure is then multiplied by a number (the “multiple”) to arrive at your enterprise value. That multiple is not fixed. It is a reflection of your story and the perceived risk of your cash flows. A facility with strong CMS ratings, a stable staff, a favorable payer mix in the Virginia market, and a clean compliance history will command a much higher multiple than one without. We help you build and tell that story to maximize your multiple.

Planning for Life After the Sale

The closing of the sale is a milestone, not the finish line. How you structure the deal and plan for the transition will define your financial future and your legacy. The decisions you make before the sale have the largest impact. As you plan your exit, we help you think through several key questions.

Here is what you need to consider:

1. Your Legacy and Your Staff. What do you want for the future of the facility you built? The right buyer will be one who respects your legacy and has a plan to care for your dedicated staff. This is a key part of our matching process.

2. Tax Efficiency. The difference between a good and a great outcome is often measured in after-tax proceeds. Structuring the sale correctly from the beginning can have a massive impact on what you ultimately take home.

3. Your Role Post-Sale. Do you want to walk away completely, or would you prefer to stay on for a transition period? Or perhaps you want to “roll over” some of your equity and partner with the new owner for future growth. We help you negotiate the structure that best fits your personal goals.

Thinking about these outcomes now is the key to a successful transition.

The structure of your practice sale has major implications for your after-tax proceeds.