The steps to sell your aged care business are largely the same as selling any business. You have to prepare yourself, your business and your paperwork. You have to value and market the business, find a buyer and negotiate the sale.
But every industry has specific pressure points that buyers will be looking at. Aged care, which has specific regulations to meet and regular audits, has more than most. Here are some of the areas you should look at when you’re preparing to sell your aged care business.
Audit Paperwork
People in the aged care business have to worry about more than just profit and loss statements, leases and organisation charts. The regulations around aged care mean buyers will be looking for a lot more.
The primary pressure point is going to be your audits. Potential buyers will want to know that your facility meets minimum standards and is not in danger of receiving sanctions due to bad audits. Collate your most recent audit reports, including certification and surveillance audits. If you’ve had a Ministry of Health inspection, include the report and any paperwork relating to why the inspection was required.
As you get ready to sell your aged care business, spend time ensuring your processes and procedures and clear and up to date. They are a significant part of your audit, so this shouldn’t take much work. Buyers want to know that they can step into your business and make a profit, and easy-to-follow procedures will let them see how they can do this.
Legal and Financial Paperwork
When it comes to legal paperwork, buyers will want to see more than just contracts with suppliers and staff. You will also need to include contracts with current residents. A potential buyer wants to know what their obligations to current residents will be if they purchase your business and any scope they have to make changes.
Finally, there are specific financial details a potential buyer will be looking for. Occupancy rates at retirement villages and aged care facilities are an important figure that you should be able to provide. If your funding model is based on occupation right agreements (ORA), you should be able to show a buyer where the collected capital is being invested and that the business is able to pay money to residents when required.
If you rely on any government subsidies for residents, especially at an aged care facility, make sure this is noted clearly in your paperwork. Include information on where the subsidy is coming from, as potential buyers will need to factor in the possibility of cuts in funding when deciding whether to buy.
Prepare your Business
Preparing your business is all about making it attractive to buyers. This often comes under the “spend money to make money” heading and may include fixing problems with the land or buildings, adding new facilities, marketing to attract more residents and ensuring staff and management all work smoothly. A well-running, profitable business will always be more attractive to buyers.
It’s possible that you’re ready to sell because you don’t have the time or capital to do these improvements. If that’s the case, remember that there will always be people looking for a bargain who have the money, energy and ideas to implement these upgrades. You won’t get as much money as you would after doing updates. Think about what’s important to you and whether the decrease in sales price is worth a quicker sale or less stress in making improvements.
The aged care sector is growing, and with New Zealand’s aging population there’s every indication it will continue to grow. This makes it a great time to sell your aged care business as people try to enter the industry. After readying your paperwork and your business, you can take the next steps of valuing your business, finding a buyer and making the sale. Remember to ask for help from a broker if you need it.
