With the population of seniors growing faster than the wider population, Canada’s care home sector will surely continue its healthy growth. But if making money is your sole incentive for entering this sector, think again – the dignity and wellbeing of vulnerable residents are at stake, after all.
Indeed, the Covid-19 pandemic has only served to emphasise the need for competent and compassionate care home operators.
Benefits of buying
If you think you have what it takes to run a care home, then buying an established operation is a route into the sector worth considering. You inherit a financial and reputational track record and everything, from the facilities and trained staff to the residents themselves, are in place on the first day you take control.
Admittedly, the business-buying process itself can take many months to complete and is daunting for anyone unfamiliar with how it works.
Fortunately, help is at hand.
A business broker can help you navigate the process, from choosing a business that meets your needs, to mediating during negotiations and making sure your interests are served in the final purchase agreement.
Beyond elderly care
Nursing homes don’t just offer assisted living for seniors – albeit this segment accounts for by far the largest share of the market and care homes for sale. There are also residences with specialised facilities for people with disabilities or chronic illnesses.
And some businesses alternatively provide assisted living and healthcare services within the homes of seniors or other people who need support, among other niches. You may have a preference for one particular niche, or you might, at least initially, be open-minded.
Wide price range
This is not a cheap sector to get into, given the costs of specially adapted premises, a team of trained carers and achieving regulatory compliance, although prices vary wildly.
At the time of writing, the most expensive business for sale on this site is up for somewhere north of $5 million, while the cheapest available option is a home care franchise on the market for $50,000. Not having to run a residential home, home care operators tend to be at the cheaper end of the spectrum.
You can also filter your search for a care home according to its location, asking price, revenue (although some vendors don’t disclose this information initially), whether the property is leased or for sale, and whether the vendor is offering to part-finance a sale, among other variables.
Once you’ve found one or two establishments that pique your interest, your adviser can help you assess the accuracy of the vendor’s business valuation, negotiate initial terms and set these out in a ‘letter of intent’.
Next comes due diligence. This is an exhaustive deep dive into every aspect of the business, including:
- Financial performance to date and revenue projections
- Condition of the premises and their contents and date of renovations or servicing/maintenance checks
- Regulatory compliance and inspection records and whether you can personally meet regulatory criteria in the province in question
- The contractual situations, and skills and attributes, of staff
- The care home’s reputation
- Whether any litigation is pending, related for instance to accidents or alleged mistreatment of residents
- Market trends and conditions, for instance, whether another nursing home is setting up nearby, or demand for a service in which the home specialises is growing
If your investigations surface any problems of which you were previously unaware, then you are within your right to renegotiate terms, either through a lower price or additional warranties and indemnities.
If the vendor is reluctant to renegotiate, or the issues have put you off altogether, you can abandon the deal at any point until the final purchase agreement is signed.
Buying a care franchise
There are plentiful opportunities to enter this sector via the franchising route.
For anyone anxious about the risks of running an independent business and are happy to follow a proven formula, franchises offer a compelling package. The training, support and (hopefully) trusted brand on offer are even more reassuring in a tightly regulated sector where the wellbeing of vulnerable people is at stake.
Generally speaking, franchisors prefer franchisees to have some previous sales and marketing and/or management experience and be willing to follow a tried-and-tested formula.