Care homes operate in an environment of high regulation, and with deepening debt levels and lack of funding across this sector, it can be difficult to survive. If you’re considering selling your care home or nursing home business, it’s vital to prepare well in advance.
You’ll need to address the inherent challenges of operating in this sector so you can achieve your financial goals and ensure a smoother process. So what issues might you face prior to selling your residential care home?
A generally high turnover of staff within the sector means care home businesses incur significant recruitment costs, with overall employment costs also being a high percentage of total business expenses. Retaining qualified nurses in nursing homes is another key issue given the ratio of nurses to residents required in this setting.
Care homes and nursing homes must operate with specific equipment to care for their residents in properties that are ‘fit for purpose.’ This requires considerable investment and incurs high running and maintenance costs, with resulting debt levels and operational expenses a significant financial burden for many care homes businesses.
The decline in local government funding has made it difficult for care home owners to grow their businesses. It’s also a challenging operating environment when you’re legally obliged to provide the necessary level of care for residents when funds are limited.
If you’re thinking of selling your residential care home it’s important to plan well ahead so you can address inherent issues that could potentially decrease its value. Updating technology, improving working processes, and ensuring you meet all regulatory requirements will enhance your offering, and help to achieve a higher price.
Initially, you should articulate clearly why you’re placing your care home or nursing home for sale, as this is typically one of the first questions prospective buyers ask. Maybe you’re retiring, or you’ve built up the business and simply feel it’s time to reap the rewards of your investment.
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The valuation of elderly care homes relies on various factors, including but not limited to:
Provision of information and associated confidentiality
A sales memorandum provides the initial information about your business to interested parties, and confidentiality is key when this is distributed. A non-disclosure agreement should be signed before the information is released - this protects your business from unscrupulous rivals, or other parties seeking to adversely influence the business sale.
Buyer due diligence
When a retirement home business is for sale, potential purchasers with serious interest will take due diligence measures to ensure the information you’ve provided is accurate, so it’s important to present reliable figures that stand up to scrutiny.
Seeking expert help
Selling a care home business is a complex affair, but professional assistance can smooth the process and help you avoid costly mistakes. Selling My Business specialises in helping business owners achieve their goals, and boasts more than £500m worth of successful completions in the last 10 years.
We can help you at every stage of your care home or nursing home sale, providing professional support in drafting and producing legal documents, negotiating with prospective buyers on your behalf, and ensuring you’re fully aware of the implications of any warranties or indemnities demanded by the buyer. Please call one of our partner-led team to arrange a free consultation.
Contemplating selling your business? Our free, comprehensive guide will walk you through how you can sell your company. Our FREE guide covers all of the essentials, including:
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