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Size-Adjusting Healthcare Services Market Multiples

As we wrote last week, larger healthcare services companies generally fetch higher valuation multiples – i.e. the purchase price represents a larger multiple of the EBITDA generated by the business. We presented a chart that includes data from health services transactions, and compares the valuation multiple to the size of the business acquired. Here’s the same chart limited to only home-based service businesses. This week, we’ve also included the regression equation from the data that describes the relationship between size and valuation multiple (top right corner of the chart). This is the equation for the line that runs through the data set, and can be used to develop size-adjusted valuat

What are Healthcare Services “Platform” Companies and Why are They Worth More?

One of the things we often discuss with our clients is the impact of the size of a healthcare services organization on its valuation. Generally larger companies are considered less risky, which leads to higher multiples and lower discount rates - and therefore higher valuations. The primary reason larger companies are considered less risky is they are more diversified in terms geography and/or services provided. For outpatient and home-based health services businesses, this typically means more locations. Smaller companies are more susceptible to major changes in operational performance due to external factors, like increased local competition or regulatory changes. Many larger companies als

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