For companies we’ve sold, multiples range anywhere from 3x-6x adjusted net income/adjusted EBITDA. This includes I/DD Group Home, Foster Care, Adoption, Respite, Autism, Day Programs, and other I/DD specialty businesses. Valuations of I/DD service companies are based on a multiple of adjusted EBITDA and in some instances, as a percentage of revenue. Strategic companies usually pay more, but the private equity world has remained very competitive especially for platform opportunities. There are compelling differences between the two buyers, especially given the rollover equity component of PE deals.
There is also a growing demand for real estate that is licensed to accommodate consumers with developmental disabilities. For example, I/DD Group Homes are coveted by many National REITS which specifically focus on acquiring this type of facility. For the owner-operator, a sale-lease back is a great way to free up some cash flow and focus more on the consumer and operations versus their real estate.