Most deals die during due diligence from preventable issues. Here's what buyers actually care about—and how to fix it before it destroys your valuation.
Single payer dependency destroys valuations
When a single payer represents more than 30% of revenue, or when your top 3 payers exceed 70% of total revenue, buyers see existential risk. One contract termination could tank your entire business.
Deal Failure Rate
40%
Valuation Impact
-30% to -50%
Time to Fix
12-18 months
⚠️ What happens if your top payer terminates their contract tomorrow?
If you leave, the business collapses
When the founder is the primary clinician, manages all payer relationships, handles key referral sources, and oversees operations, buyers see a massive risk. They're buying a job, not a business.
Deal Failure Rate
35%
Valuation Impact
-25% to -40%
Time to Fix
6-12 months
⚠️ What happens to revenue if you're gone for 90 days?
State survey findings kill deals instantly
License deficiencies, state survey findings, serious incident reports, and regulatory violations are non-negotiable for buyers. They cannot get representation & warranty insurance with open compliance issues.
Deal Failure Rate
30%
Valuation Impact
Deal termination
Time to Fix
3-24 months
⚠️ Buyers inherit your liability and compliance history
Can't verify EBITDA = No deal
Missing P&Ls, commingled expenses, unsupported add-backs, and poor financial records prevent quality of earnings analysis. Lenders won't finance deals without clean financials.
Deal Failure Rate
35%
Valuation Impact
45-90 day delays
Time to Fix
60-90 days
⚠️ Can you produce these documents in 48 hours?
Top 3 sources drive 70% of admissions
When your top 3 referral sources represent more than 50% of admissions, buyers discount heavily. What happens if that doctor retires? If that facility changes ownership?
Deal Failure Rate
25%
Valuation Impact
-15% to -25%
Time to Fix
9-18 months
⚠️ What if your key referral sources stop sending patients?
Medicaid mix crushes multiples
Payer mix quality drives multiples more than EBITDA size. A $1M EBITDA facility with 70% commercial will sell for more than a $1.5M EBITDA facility with 70% Medicaid.
Deal Failure Rate
20%
Valuation Impact
0.5x per 10% commercial
Time to Fix
12-24 months
⚠️ Commercial vs. Medicaid: 2-3x multiple difference
Old receivables reduce cash at close
Days Sales Outstanding (DSO) above 60, more than 20% of A/R over 90 days, or bad debt above 5% signals billing problems. Buyers take massive working capital adjustments.
Deal Failure Rate
15%
Valuation Impact
Working capital haircut
Time to Fix
60-90 days
⚠️ Every $1M in old A/R costs you $500K-$800K
Quick self-assessment to identify your critical risks