The preliminary numbers are in, and the 2023 senior care M&A market ended up healthier than most would have predicted at the start of the year. U.S. transaction volume, based on deals that have been publicly announced but not necessarily closed (although most deals are completed by the time they are disclosed to us), reached 441 deals in 2023. That is 15% down from 2022’s domestic volume of 517 transactions, but it surpasses 2021’s deal volume of 427 transactions by 3%.
Given the pullback in liquidity, the rapidly changing capital costs, economic uncertainty and collapse in cash flow at communities across the industry, a more precipitous drop in M&A volume could have been expected. However, many of those issues still prompted enough sellers, or often their lenders, to bring their properties to market from a standpoint of distress (and desperation in some cases). And most sellers, as long as they accepted the new “market value” for their properties, could still find an opportunistic, cash buyer in 2023.
Anecdotally, the end of the year brought a glimmer of hope for owners of high-quality seniors housing communities wanting to enter the M&A fray. A handful of large portfolio deals and single-site, Class-A communities sold at high prices to institutional buyers. They may serve as tempting comps to persuade a few more owners to sell their Class-A properties in 2024.
We will continue to analyze the 2023 M&A market throughout January as more transactions trickle in. Plus, we will release a full study of the market and its valuations in our Senior Care Acquisition Report. Stay tuned.
