MN 245D HCBS Provider, Twin Cities Home & Community-Based Services

$2.1M

Revenue

$554K

SDE

3.6x

Multiple

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Full Editorial Writeup

This is a Minnesota 245D licensed Home and Community-Based Services (HCBS) provider operating in the Minneapolis and St. Paul metro area. The company delivers state-authorized disability and long-term support services including Individualized Home Supports (IHS), Semi-Independent Living Services (SILS), 24-hour emergency assistance, and Integrated Community Supports (ICS). It holds licensing for 20 ICS units across three locations, each carrying long-term lease eligibility, and has already been revalidated by the state.

The business generates roughly $2.12M in annual revenue with $553,678 in cash flow, a healthy 26 percent margin for a services operation. Revenue in this model is largely funded through Minnesota Medicaid waiver programs (DHS), which pay providers on ongoing authorized care plans for enrolled clients. That structure creates sticky, government-backed cash flow that does not evaporate in a downturn because the underlying need (care for disabled and dependent adults) is non-discretionary.

Notably, the seller requires the buyer to already be a current owner in the industry, which reflects the heavy regulatory gating around 245D licensure. The deal is SBA pre-approved at a 3.61x cash flow multiple, and the combination of established licensing, revalidation, and secured multi-site lease eligibility makes this closer to a turnkey licensed platform than a startup build.

Why we like it

Earnings quality is strong for a service business at $553,678 of cash flow on $2.12M revenue, roughly a 26 percent margin funded largely by Minnesota Medicaid waiver dollars. Government-backed reimbursement on authorized care plans produces predictable, sticky collections rather than one-off project revenue.
The moat here is regulatory. The 245D license, completed revalidation, and 20 ICS units across three locations are hard to replicate quickly, and the seller's requirement that the buyer already be an industry owner underscores how gated entry is. Licensing scarcity is what protects margins in this space.
Demand is structurally durable and growing. Care for disabled and dependent adults through HCBS waivers is non-discretionary, aging-population tailwinds are real, and Medicaid funding for these programs is politically resilient. This is about as recession-resistant as SMB services get.
For the right operator this is closer to a bolt-on than a standalone learning curve. An existing 245D operator can plug this into shared back-office, compliance, and staffing infrastructure, immediately improving margin on the acquired book without rebuilding administration.

How to improve it

Audit staffing ratios and overtime against authorized service hours in the first 90 days. Labor is the dominant cost in HCBS, and even small improvements in scheduling efficiency and reduced agency/temp reliance flow straight to the bottom line.
Fill the 20 licensed ICS units to capacity if any are underutilized. Licensed but unfilled units are stranded margin; a targeted referral push to county case managers and discharge planners converts existing capacity into revenue with minimal incremental fixed cost.
Build or tighten the referral pipeline with county DHS case managers, hospitals, and group homes. In HCBS, census growth comes from being the reliable provider case managers trust, so formalize outreach and response-time SLAs to win more placements.
Diversify enrolled service lines beyond the current IHS, SILS, and ICS mix where the license permits. Adding adjacent authorized waiver services deepens revenue per client and reduces concentration risk on any single program's reimbursement rate.
Standardize compliance and documentation systems ahead of the next revalidation cycle. Denials and clawbacks come from documentation gaps, so investing in EVV compliance and audit-ready records protects the reimbursement base that this entire valuation rests on.
Renegotiate or lock in the three location leases given the long-term lease eligibility already in place. Securing favorable multi-year terms protects the physical footprint tied to the ICS licenses and removes a key operational risk from the model.

Diligence notes

Verify the exact payer mix and reimbursement rates from Minnesota DHS/Medicaid waivers. Concentration in a single waiver program or exposure to pending rate changes could materially shift the cash flow, so confirm current rate schedules and any announced adjustments.
Confirm the licensing and revalidation status is clean and transferable given the buyer-must-be-current-owner requirement. Understand exactly how the 245D license, the 20 ICS units, and the three-location authorizations transfer on a change of ownership, and whether DHS re-approval is triggered.
Scrutinize the $553,678 cash flow for owner add-backs and whether the current owner performs clinical, administrative, or compliance duties. If the seller is filling billable or supervisory roles, replacement labor cost could reduce true buyer earnings below the stated figure.
Examine census stability, client tenure, and turnover history. Sustainable revenue depends on filled units and low client churn, so review the trailing utilization of all 20 ICS units and any recent enrollment or discharge trends.
Review the three facility leases for term, renewal options, rent escalation, and assignability. Since the ICS licenses are tied to physical locations, any lease that is short-dated or non-assignable is a direct threat to the licensed capacity being purchased.
Assess documentation and compliance history for any past DHS audits, corrective action plans, denials, or clawbacks. A clean regulatory track record is essential in a reimbursement-driven model, and prior violations could signal future revenue risk.

Source

Originally listed on BusinessBroker.net. View original listing →