Care homes represent a viable investment opportunity post-recession

April 18, 2012 | By | Reply More

 

Tracey Dickens

It is well known that the care home industry has endured a turbulent few years as a result of the worldwide economic downturn.  Purchases and sales have reduced as funding has become more difficult to obtain, while local authorities have been squeezing bed rates and avoiding block contracts – resulting in caution from acquirers.

But according to Essex solicitors Birkett Long, care homes can still represent a solid investment with a maintainable future income – which is good news for both buyers and sellers alike.

Health and social care legal specialist Tracey Dickens explained that those who are looking to purchase a care home should identify that they have the appropriate management experience for the sector, along with a genuine desire to care for the elderly and others with specialist needs.

She added: “The industry is highly regulated and so management will require expert levels of administration to ensure the success of the home.  Care homes are subject to inspections by the Care Quality Commission and a poor inspection will affect its value in the future as well as its occupancy rates.”

From a legal perspective, purchasers will need to establish if they are buying the business itself or the company that owns the business. She said: “Your solicitor will advise you on the legal due diligence you should undertake before committing to the purchase, as well as confirming the property ownership arrangements – for example whether it is leasehold or freehold.  In addition, he or she will deal with your bank’s lending requirements to enable you to obtain the funds for the purchase.

“Solicitors with expertise in the care home sector will ensure that the right questions are asked about the business and that an appropriate contract is negotiated.  This will give you comfort that, from a legal perspective, the business is a sound purchase.”

Meanwhile, preparation is key when it comes to selling a care home.  “Pre-planning allows owners to capitalise on their hard work and ensure the best value is obtained for the home,” Tracey said.  “They need to ensure the home is presented to a high standard, which means maintaining essential maintenance throughout.  

“It is also necessary to consider the best way of selling, whether it is appropriate to sell the business as one or a number of parts.  Advice from your accountant and/or a business sales agent or valuer will also help identify and maximise value.”

Tracey added that good solicitors will guide sellers through any restructure needed to get the business in line for sale. “Business value will be boosted by efficient operations, with up to date documents and policies relating to staff and customers,” she said.

Tracey confirmed that: “With the right advice, the sale and purchase of a care home can be an extremely smooth process which is ultimately beneficial for each party.”

Birkett Long, which has offices in Basildon, Chelmsford and Colchester, is known for its expertise in the health and social care sector. For assistance with the purchase or sale of a care home or domiciliary care agency, contact Tracey Dickens at Birkett Long LLP on 01206 217326 or tracey.dickens@birkettlong.co.uk

 

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Category: Care Home News, Care Homes For Sale, Care Industry News

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