I am about to make an offer on a care home, how long is the purchase process likely to take?

The two issues that normally take the longest to resolve in a care home purchase are firstly the application for the CRB checks and the subsequent CQC application and secondly obtaining bank funding. It should be possible to complete a straightforward purchase in three months, but the average purchase probably takes in the order of six to twelve months.

I am preparing my care home for sale, what documentation is likely to be required by the buyer and his funder?

The core documentation that will normally be required by a care home purchaser is set out below:

1. Inventory of Equipment that is included in the sale.
2. List of Employees of the business.
3. Copy of your Standard Employment Contract and any Contracts that are not in the standard form.
4. If there are any items on HP/Lease, a list of the items and a copy of the Lease Agreement.
5. Any Planning Permissions or Building Regulations Consents that you have.
6. A copy of the current CQC Certificates (owner and manager).
7. A copy of the last Local Authority Food Safety Check with confirmation that any issues raised by the local authority have been dealt with.
8. A copy of the Fire Risk Assessment and any correspondence from the Fire Authority if there have been any recent inspections.
9. A copy of the Asbestos Audit in respect of the property being sold.
10. A list of residents and copies of the residents’ Contracts.
11. A full copy of any Local Authority Pre-Placement and Placement Contacts.
12. The latest Periodic Inspection Reports in respect of all electrical installations and all portable appliances.
13. Any Safety Certificates for the gas appliances.
14. The latest Inspection Report for the Fire Alarm.
15. The latest Inspection Report for the emergency lighting system.
16. A copy of the Heath & Safety Report.
17. Any Inspection Reports for nursecall systems, lifts, baths, wheelchairs and hoists etc.
18. Copies of the current Statement of Purpose and Service Users Guide.
19. Copies of any contracts that the purchaser will take over in respect of maintenance of equipment, clinical waste, laundry equipment etc.
20. Details of any actual or pending litigation, resident complaint or CQC investigations.
21. A list of the main suppliers to the business.
22. Details of the implementation of any recommendation for improvement from the last CQC inspection report.

How can I ensure that the person I am buying a care home from does not directly compete against me following the purchase?

The purchase contract would normally contain restrictive covenants preventing the seller (and if the seller is a company also the officers of the company) from directly competing against you. These clauses normally also prevent the poaching of staff and residents.

I am a new provider, what steps do I need to take to apply for registration with CQC?

The CQC website contains a section “For Organisations We Regulate” which sets out exactly the steps that need to be taken by the purchaser of a care home.

How much will my legal fees and additional costs be?

All costs will vary depending on the size and complexity of the individual transaction. Industry specialists will help control and keep costs to a minimum.

Can I use my family solicitor?

Of course you can, but buying a care home is a complex process. We do recommend that you take specialist advice from sector specific industry experts.

I am preparing my care home for sale and have had a previous share buyback agreement.  Will I need to provide the Buyer’s solicitor with the documentation regarding the transaction?”

Yes you will need to provide all documentation regarding the transaction which will typically include Board Resolutions, the Share Buyback Agreement, Shareholder Resolution, Solvency Statement, Updated Register of Members, Stock Transfer Form, and HMRC filings.

Once an agreement in principal has been made between the Buyer and a Vendor, the key terms of the proposed transaction including the consideration payable is set out in a document called the Heads of Agreement/Heads of Terms. Whilst not a legally binding document, the Heads of Agreement stipulate certain deal criteria, which helps avoid dispute and misunderstanding later in the transaction process.

The parties typically agree a period of exclusivity, which gives the buyer sufficient time to carry out due diligence.