Thinking of selling your Nursing Home?

With the number of people over the age of 65 expected to more than double over the next 25 years, demand for nursing homes is steadily growing. It is no surprise, then, that investment in the nursing home sector is rapidly growing in order to increase supply to satisfy demand, with a number of international funders entering the market.

There are 5 key areas that a Nursing Home owner needs to consider before commencing a sales process:

1. Realistic valuations

The best way to understand how much your business is worth is to have a look at the market and become familiar with the prices at which other nursing homes are selling.

You should also speak to an adviser or an accountant who has experience in this sector because the recent changes can make it difficult to understand what value you should be asking for right now.

The number of beds that you have in your nursing home will obviously affect the value but, more importantly, the value will be influenced by the occupancy rates. It is good to have your beds full, but buyers will also want to make sure that they can expand so it's not a bad idea to have some beds open that will suggest increased future profits to buyers.

2. Understand the buyer market

Establishing a credible buyers list at the outset and understanding their acquisition criteria will be key to a successful sales process.

Be sure to check the buyer credentials at the outset to ensure that (i) they have the ability to fund a transaction and (ii) they understand the market.

If you are going to use a business broker to sell your nursing home, make sure they have the experience in this sector. This sector has different rules and regulations from many others and having someone on your team that understands how this will impact the sale will be a lot of help to you.

3. Be Prepared

One of the common pitfalls we see is a business owner jumping into unstructured sales process, often on the back of an unsolicited offer. By not preparing the company for the sales process, value can be leaked throughout the due diligence resulting in lower price and potentially damaging the business.

It is important that all of your financial and operational information is accurate, up-to-date and presented in the best possible light.  Any projections provided need to be robust and based on credible assumptions that will stand up under scrutiny, while sensitive information should not be released without necessary protections in place.

Engaging with your advisers early to help you prepare the relevant documentation for the property and legal due diligence will also help ensure a smooth process.

4. Consider tax at outset

From a tax perspective, there are many aspects to consider, including Sale of Assets or shares, Capital Gains Tax, Entrepreneurs’ Relief and Retirement relief. The structure of the deal may vary should you choose to sell to a financial or trade buyer, or you may wish to restructure the business in order to gain advantage of a potentially more beneficial tax position. 

5. Don’t forget the business

Apart from the financial and tax preparation, it is important to consider the full spectrum of business issues when selling a nursing home, including Management and staffing, HIQA compliance as well as marketing, administration and internal controls and systems. The success of the nursing home depends upon the people and its systems upholding the best standards of care so be sure that the sales process does not disaffect the staff or the residents.

So whether you plan to sell now or in the future, the key to unlocking value is to get organised early and put yourself in the buyer’s shoes. This makes the sales process more efficient, cost effective and secures the best sale price – you often only get one chance to get it right!

If you want some more information, call George Skelton on 053 9170507 or email gskelton@rda.ie