The care home sector is one of the fastest growing in the UK and offers a wide range of business opportunities to those currently working within the sector and those looking to expand. If you’re thinking of buying a care home, you’ll quickly discover that it’s a much more complex process than simply finding the right location, property and staff.
The provision of care is a highly regulated sector. In addition to the more general legal and commercial considerations associated with a business purchase, those buying a care home business must comply with the stringent requirements of the Care Quality Commission (CQC).
How will the purchase be structured
When purchasing a care home perhaps one of the most fundamental questions which needs to be resolved is how such a purchase will be structured. If the care home currently operates through a company limited by shares it may be that the acquisition of the entire issued share capital of that company will be an appropriate way to make the purchase.
Alternatively, it is possible to purchase the assets from the company, or if the business is operated as a partnership or by a sole trader an asset purchase may be the only option. Both a share purchase and asset purchase have their advantages and disadvantages. We can discuss both options with you whilst also pointing out why a seller may prefer one option over the other, often tax and risk will play a key part in this decision making process.
Once you have settled upon a share or asset purchase arrangement it will be necessary to determine how the payment for the care home will be dealt with. Often as a buyer it is preferable for there to be a period of deferred consideration. This may be linked to the future profitability or turnover of the care home, alternatively if certain specific issues are unveiled in the due diligence process it may be that a proportion of the purchase price is withheld pending the resolution of a specific issue.
Having the right advice is crucial. You need an expert who has a solid understanding of the complexities involved, including the commercial aspects of purchasing a care home, the regulatory and compliance issues and health & social care law. Call Tim Field, our health and social care solicitor, on 01206 217366.
What could affect the property?
Away from the pure commercial and regulatory aspects of purchasing a care home, buyers also need to be aware of any matters which may affect the property, such as restrictive covenants, planning permissions and environmental issues. If any of the properties are leased, the terms of the lease should be carefully reviewed. It is crucial that buyers are fully aware of any issues before completing the purchase.
Another key legal area to consider will be staff and ensuring that employment law has been adhered to. We have the knowledge and expertise to guide you through the process and to give you practical advice to help ensure a successful business transfer.
In addition to the legal aspects of purchasing a care home you may also require the assistance of other professionals this may include a corporate financier to assist in raising funds for the acquisition and a tax adviser or accountant to help with due diligence. We work with a number of these professionals and are able to help you build the right team to ensure the acquisition you intend to make is as smooth as possible.
How we can help you with the buying of a care home
Our health and social care team provides support through the process of the buying of care homes from agreeing on terms to completion, including
- Preparing Heads of Terms
- Assisting you with the due diligence process and providing reports on due diligence provided by the Seller
- Drafting a share purchase or asset purchase agreement as necessary
- Drafting ,negotiating and agreeing warranties and indemnities to protect you, as buyer, in the event the Seller has not made full disclosure of negative factors affecting the business
- Drafting completion accounts or deferred consideration provisions
- Advising on the transfer of employees
- Advising on the transfer of care home premises
- Assisting with CQC Registration
Our specialist health & social care team can provide all the advice you need about the legal side of buying a care home. We work in partnership with you.
We have extensive experience in advising on the buying of care homes and are able to include expertise from other teams within Birkett Long including commercial contracts, commercial property law, employment law and dispute resolution.
Call Tim Field, our health and social care solicitor, on 01206 217366.
What are the main requirements for running a care home?
The CQC’s role is to ensure that health and social care services provide people with safe, effective, compassionate and high-quality care that is responsive to the residents’ needs.
There are many detailed CQC regulations which set out minimum requirements for care home owners. In addition, you will also be responsible for looking after the residents’ emotional well-being through the provision of social events, light exercise programmes and day trips etc, as well as catering for basic needs such as hairdressing services and dental treatment.
You will be inspected on a regular basis, twice a year, through unannounced inspections, at any time of day or night. If the CQC finds your care home is not meeting the required standards, you will be asked to address the issues and may be fined and/or given a formal warning. Ultimately, the CQC may stop your home from accepting new residents or even strike you off the register.
Care Home Sector Solicitor
For a no obligation chat on the phone about a care home purchase or your potential buyers, call Tim Field, our Head of Commercial and health & social care solicitor.
