What to Consider When

When considering whether to buy a care home business while you will no doubt have taken account of apparent profitability and potential, it is vital that you establish as far as possible likely costs (e g legal fees due diligence costs, post completion costs (tax, investment)) during and after the buying process as well as having a realistic idea of the timescales involved

INVESTMENT

It may sound obvious but you must always check the numbers carefully Has the bottom line been enhanced by underinvestment? This will go hand in hand with the due diligence exercise but what will the business require going forward whether it be property repairs/renovation (whether in terms of practicalities or statutory requirements) or investment in staff and facilities? You need to establish what needs to be spent after completion of the purchase in order to sustain and/or enhance profitability

This will no doubt form part of your business plan which, where funding is being obtained, your lender will want to look at

FINANCE

If you need to obtain finance for your deal consider the additional steps and costs that will be involved

An investor or lender will likely have specific requirements in terms of structure (creation and/or involvement of group companies) documentation (occupational leases) and/or due diligence (additional searches/checks) that may affect timing and expense

ASSET/SHARE PURCHASE

In most cases, a care home will be owned and operated by a limited company rather than an individual

Therefore usually one of the initial critical decisions to be made is whether to proceed by way of an asset or share purchase Advice should be sought on a case-by-case basis as there are a number of things to consider in terms of for example tax or financial implications Essentially with an asset purchase you are buying those “items” (e g the property the employees etc) which you consider to be vital to the continued running of the business With a share purchase you take on all assets and liabilities of the owning company