Practical Steps When Preparing to Sell Your Care Home
When it comes to the time to sell, there are certain common themes that arise which, if tackled early, can help save the financial resources of your business, and save time.
Check with Companies House to ensure that all your filings are up to date. While it may seem a tedious exercise, the time taken at this stage will pay off making the sale process a lot less stressful and cheaper.
Create a contracts table with details of start and end dates, cost per year, how you get out of the contract, key contacts, and if the contract is transferable – an easy way to identify burdensome contracts and have key details to hand (which a buyer would ask for) – doing this now will enable you to benefit too.
Have you completed your right to work checks? This is a particular issue which is unfortunately rarely done correctly. You need to check every employee has a right to work (including British citizens) and keep evidence that a check has been done. The fines per illegal worker are around £60,000, so there are serious consequences if you get it wrong. With Home Office visits and checks increasing, the bad publicity for any failings will make a sale that much harder.
Assess your processes for right to work checks; when is the check carried out? Where are evidence documents kept and who does the checks? Make changes as needed.
If you don’t have a sponsorship licence, will you need one in the future? If so, start the process now as it can take up to 16 weeks to get approved.
Work on any issues that you’ve been avoiding, perhaps a troublesome employee, a supplier dispute or a dispute with a neighbouring property owner. By taking care of these things now, you’ll be saving yourself time and money in the long run.
It’s also a good idea to review your resident contracts; can you increase fees if care needs change and can you terminate the contract if you can’t meet a resident’s needs? How can you recover debt if a resident runs out of money or passes away? Can you transfer a resident’s contract to a buyer? Again, make any changes necessary now.
The sale of the business is likely to give rise to some kind of tax liability, details of which will differ depending on what you’re selling – whether the trade and assets or the shares. Comprehensive tax planning ahead of any sale helps ensure that you maximise the net proceeds you’ll receive from the sale after tax has been paid.
If there are certain property, assets or divisions you don’t want to sell, these will need to be ring-fenced in some way. There are tax consequences to this too, therefore you need enough time to action this and obtain clearance before a sale, which can take up to 12 months.
Always remember too that before providing any information to an interested party, you should speak to your advisor and ensure that everyone signs a confidentiality agreement. This will protect you from disclosing information that either may cause a breach of law or be used against you by a competitor.
A little investment of time and money now can save you stress, time and money in the longer term, so try to keep on top of ensuring that your affairs are in order. You want to make your business look as attractive as possible to a potential buyer and any step you take now may boost the value of the business. By understanding how you value your business, what adds and diminishes value, you may be able to adjust certain things to bring the valuation closer to your expectations when the buyer confirms the price it is willing to pay.
For further information, please get in touch with the experts at Stephens Scown.
Jade Kent regularly advises clients on disposals, acquisitions, restructures, and governance aspects of care homes, often when sellers are approaching retirement.
For further advice, please call 07548 224516 or email email@example.com