Lots of owners are grumbling lately. There seems to be a sentiment going around where sellers are asking for the price of what they think their facility will be worth after someone else spends years and millions adding value. Not to mention sweat equity and energy invested.
"This 120-bed facility has tremendous upside potential. With $3M in renovations, improved census management, and better payor mix, this could easily be worth $25M."
The Skeptical Buyer: You're asking me to pay Ferrari prices for a Honda because it could be a Ferrari if I spend another $100K upgrading it and oh by the way that will take two years in the garage to accomplish while I'm still paying through the nose to upgrade it all along the way.
The Seller's Defense: "Look, I've owned this place for 15 years. I know every inch of this building, every referral source, every staff member. I've built relationships that took decades to develop. You're not just buying bricks and mortar - you're buying decades of my work and all the goodwill that comes with it. Plus, I'm handing you a roadmap of exactly what needs to be done. That has value. I simply don't have the drive to do it on this home because I'm dealing with 14 others?"
What Sellers Don't Get: The buyer has to carry all the risk, spend all the money, do all the work, and deal with survey headaches during construction. You want to get paid for their future effort and investment.
Bottom Line: Price your facility for what it is today, not what it could be someday. The upside potential is exactly why buyers are willing to take the risk - but they're not paying you for it upfront.