M&A Opportunities in the Evolving Senior Living Market in 2024

The senior living market is at a pivotal point. Demand for senior living facilities is surging as the Baby Boomer generation ages, and this demographic shift is significantly reshaping the industry. 

In 2024, basic housing and care is not enough. Seniors are facing chronic conditions. They want to age in place as long as they can. Plus, healthcare technology and delivery are continuing to become more sophisticated and provide seniors with more options. As a result, seniors are looking for more lifestyle-oriented services that enhance their overall quality of life. 

Yet despite these advances, the senior living industry remains fragmented. This presents opportunities to consolidate the market for operational efficiencies and integrate specialized care into senior living portfolios. 

Why M&A Is on the Rise

According to McKnight’s Senior Living, the second quarter of 2024 saw a record number of 183 publicly announced M&A transactions, a 49% increase compared to the same period in 2023. 

The rising costs of providing healthcare services (especially in skilled nursing and memory care) are making it increasingly difficult for smaller operators to compete. 

These distressed facilities have become attractive acquisition targets for investors that have greater resources to absorb these costs. However, it’s important for parties on both sides of a potential transaction to conduct the evaluation process thoroughly to make strategic and informed decisions. 

At CJBS, we’ve seen the complexities of this process firsthand. Here are some of the factors we regularly analyze for our clients: 

• Market position and strategic fit
• Regulatory and compliance readiness
• Operational efficiency and scalability
• Financial health and growth potential
• Management and culture fit
• Technology integration and innovation
• Reputation and brand equity

Payroll: A Critical Area of Due Diligence

One lesson we’ve learned from the numerous due diligence reports we’ve completed for investors that we’ll call out here is payroll inefficiencies. Here’s what we often find: 

• Overstaffing during low periods and understaffing during peak times
• Lack of cross-training among staff
• Inadequate use of technology (especially manual scheduling methods)
• Unnecessary duplication of processes or services

It’s also very important to scrutinize how labor costs are being allocated across departments to gain a complete picture of a facility’s payroll management. 

When done correctly, this analysis can help improve a facility’s bottom line and operate more efficiently–which ultimately leads to improved care for residents, our ultimate goal. 

The Investment Opportunity Ahead –

An American Seniors Housing Association (ASHA) report, cited by Senior Housing News, shares that many of the nation’s 76 million Baby Boomers will transition into senior housing in the coming years. Sixty percent of respondents in the ASHA survey said they are considering a move to a senior living community within the next four years. 

This growing demand presents an important investment opportunity to either build new facilities or improve existing ones to accommodate the needs of our aging population.

At CJBS, we specialize in these senior living M&A. We can help you determine business valuation, conduct due diligence, and offer other pertinent financial insights to help you negotiate the deal. That’s because our due diligence process goes beyond the books. We conduct interviews, build flowcharts, and examine the inner workings of the business to provide investors with a clearer picture of the business moves they are considering.

If you would like us to help you evaluate an opportunity, schedule a call with our Real Estate and Senior Living expert and Managing Member, Jeffrey Stuart, CPA, here.