Life brings twists and turns. Sometimes those things cause us to make difficult decisions to leave behind something that might have once been our dream but no longer fits into the future as we now see it. You’ve given your heart and soul to the aged care industry but now it’s time to move on.
Perhaps you’re tired of navigating all the challenges, the constantly changing legislation, struggling to find and retain qualified employees ... and are seeking a simpler business venture. Or maybe you’re just ready to retire and enjoy your golden years. Whatever your reason for selling, though, preparation is essential to a successful exit.
Do your best not to rush into a sale and take time to study the current market to determine if it’s a good time to sell or if you would be better off waiting.
Once you decide to sell, do your best to continue to grow a successful, profitable business. Prospective buyers will be looking for a well-rounded facility with a steady cash flow that will continue to be a strong investment in the future.
Truthfully, the process to prepare your aged care facility for sale can be tedious. Potential buyers will want to see evidence of your current results and plans for growth. Make sure your financial records are clear, organized, and up-to-date. It’s highly advisable to enlist the help of an accountant to prepare your financials.
Also, look at your facility with a critical eye, and conduct all necessary renovations and repairs to spruce it up and make it as appealing as possible.
The physical structures of the facility must be in excellent condition. Keep in mind, aged care facilities need to be completely safe environments that are fully compliant with all government regulations to give buyers confidence.
Above all else, continue to build a solid reputation. Increase your marketing efforts to attract more residents, and evaluate your procedures and processes to ensure that everything is working smoothly.
There are a number of factors that have a direct impact on the valuation of businesses in the aged care sector, such as the following:
- Potential for scalability
- Ability to take advantage of government subsidies and grants
- Implementation of quality systems, procedures, and protocols
- Ownership of more than one facility and optimal occupancy rates
- Level of demand for services in the surrounding area
There are generally two methods employed by commercial valuers:
- The earnings before tax, depreciation, and amortisation (EBITDA).
- Value of Residential Accommodation Deposits (RADs) as per the occupancy level of the care home.
Due diligence for sellers
Not only will prospective buyers want to evaluate the financial side of your business and expect to see detailed financial records, but they will also 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 and any health inspections. Prepare a detailed explanation of all safety procedures and processes.
Buyers want to know that they can easily step into your business and make a profit, and easy-to-follow procedures will give them confidence in their ability to successfully do that.
When it comes to legal paperwork, buyers will want to see the following documents:
- Tax returns and profit and loss statements for at least the last three years
- Plans for growth and expansion
- Marketing strategy and analysis of traffic
- Maintenance records on equipment
- Contracts with suppliers and staff
- Contracts with current residents
- Occupancy rates
- Evidence of compliance with applicable licences and permits
- Any government subsidies for residents, including information on where the subsidy is coming from
Enlist the help of a broker to put your business in front of the right people and to vet potential buyers for you. Although you’ll have to pay for their services, their expertise will keep you from wasting your valuable time on people who aren’t serious buyers.
They will also help you see areas where you can improve your business and make it more attractive to potential buyers.
The aged care industry shows signs of steady growth, making it a great time to sell your business. So, be patient, don’t rush into a sale, and wait for the perfect buyer to come along.
If you feel that you’re ready to move on from the aged care industry, visit here and let us help you make a smooth and profitable exit.