How to sell your Complex Care business
So, you’re thinking about selling your complex care business? Here at Phoenix our expert advisors make things as easy as possible for you, so to get you started we’ve put together this list of the top eight components which are essential to the sales process.
The first thing you need to do when it comes to selling your complex care business is ensure your finances are in order. You will need the last two years of financial statements and any management accounts for the period since the end of the financial year.
At Phoenix we understand that as a business owner you want an accurate valuation when you’re selling your complex care business. We normally calculate the company’s worth on a multiple of profits. Geography, the size of the business and the mix of contracts are also taken into consideration.
We also consider any payment in lieu of the net current assets and exclude one-off or non-recurring costs. In addition, if the business is in the growth phase we will look to calculate profits on a ‘run rate’ to get the best, and the most accurate, valuation.
Generally speaking, the sales process takes between 10 and 12 weeks, providing all the required information is readily available. However, this time frame is dependent on the complexity of your business.
It is crucial when selling your complex care business that you choose an advisor who understands the importance of confidentiality during the sales process.
All potential purchasers should sign a non-disclosure agreement before any information about your company is shared with them and all communication with you should be conducted in a sensitive manner via secure means.
It is also a good idea to conduct all meetings with your sales advisor and any potential purchasers away from the office or outside of working hours.
It is normally better to sell the company shares if possible, this will eliminate the need to change LA contracts and employment contracts post-sale.
There are also significant personal tax benefits to be gained by selling the shares in a small/medium sized business, including entrepreneurs’ relief. Entrepreneurs’ relief means you will only need to pay a one-off tax charge of 10% on the next proceeds you receive from the sale of your complex care business.
There are a number of costs you need to think about when selling your complex care business.
A corporate finance advisor, such as Phoenix, will charge an agreed percentage of the total sales price, which is paid on completion of the sale. A corporate solicitor will provide you with a fee quote in advance of the sales process, which is usually around 1% of the sale value and you may also need accountancy support during the sales process, depending on how up to date your financial information is.
7. External support
It is always better to use advisors who are experts in the industry, due to the nature of care businesses and the complexities involved in selling them. You can use your own solicitor and accountant, but you should ensure that they have relevant experience of healthcare and social care transactions as without this the sales process can become more complicated.
8. The details
Your buyer will want a lot of information about your business before they commit to a sale. One of the first things they will ask for after the company’s financial statement will be proof of the quality of care your business provides, so ensure you have evidence of any Care Quality Commission (CQC) reports, accreditations and awards.
Next gather information about the business’ local authority (LA) contracts, NHS contracts and tenancy/property ownership agreements. Buyers are usually very keen to continue trading from the business’ existing premises, so this information is absolutely essential.
You will also need to provide details of existing staff contracts, including information about hours per week, charge and pay rates and their duration, as well as the number of workers you employ.
Finally, don’t forget to outline the type of service you provide and what your clients expect from your business, the size of care packages your company offers and the revenue mix of funders (e.g. private, LA, NHS etc).
For more information on selling your complex care business, get in touch.