Back to The Successful Sales Strategy
Managers who fully understand the business and its operation will be essential and resources may be needed to fund and train them.
For smaller businesses this is particularly important because the skills and knowledge are often vested in the proprietor. An effective management team usually needs to be operational in advance of any changes to maintain continuity and ensure that the business will continue to prosper. New reporting processes might be needed to allow the proprietor to oversee the business without being involved day-to-day if, for example, a Director of Care were appointed to oversee daily activities.
Many groups operating within the long term care sector believe that the only way to exit the sector is to sell the freehold interests.
Leasing may be an option to operators who wish to retain a good return from their care businesses without the on-going operational responsibility.
The actual terms of care home leases can vary significantly. Generally operators enter into 25 to 35 year leases with annual rent reviews linked to RPI increases. Shorter leases can be agreed albeit they tend to reduce the investment value.
Depending on the lot size the home or group can be let to a wide spectrum of operators ranging from major UK institutions and listed companies to small private groups.
They are looking for good-quality local management to transfer with the business, particularly when much of the day-to-day operation is dependent on the business manager.
Conclusion
The importance of a comprehensive exit strategy cannot be under estimated; it will enable you to:
- Build a stronger business with the highest possible value.
- Plan for management succession, or for the sale of the business to the existing management or a third party.
- Plan for financial freedom to fund your preferred lifestyle and retirement.
- Plan and maximise your financial future.
Choosing the right time to sell a business is never an easy decision to make. This is particularly difficult in the care sector where confidentiality is always a concern and vendors generally have developed relationships with staff and patients/residents over several years. However, pre-sale preparation can ensure that once that decision has been taken, you can maximise the sale price and minimise the time that it takes to sell your business.