The Market For Care

Staffing resource challenges, ever increasing regulatory regimes, local authority inspections, rising inflation, utility bills increasing rapidly; hardly a great way to start a conversation. Nonetheless these are all issues facing the care industry. But what's new? Care has never been for the faint hearted and yet the appeal of the sector remains strong. I see interest across the board, from new entrants who had previously invested in other sectors that haven't fared so well in the post-Covid era, to existing operators looking to consolidate. Of course, homes with a high percentage of self-funded clients in wealthier areas remain as sought after as ever, but homes in the mid-market with a good compliance history are also on the target list of many buyers, along with the turnaround opportunities that less well performing homes can provide. Homes that have expansion potential also appeal for obvious reasons.

Funders see the potential in the care industry across the board from independent living apartment developments and specialist care settings, to elderly residential and nursing homes. Of course, funders prefer a business which is as future proof as possible, so larger bedrooms with en-suite wet rooms and a CQC rating of at least Good are preferred. However, I am having more discussions with funders about homes that are not quite there now, but with a little attention and investment, could be transformed. Those with a Requires Improvement rating can be of particular interest, especially if it's almost Good rather than almost Inadequate. I always review inspection reports to understand the rating as much as possible and understand its potential for a new owner. Is it a single unfortunate inspection, with the problems identified already resolved, or a more embedded issue? Some funders are doing exactly the same thing and taking a view on the buyer's turnaround credentials.

So, what of the homes that are not faring so well from either a compliance or financial perspective? There are a number of reasons why such a home might be of interest to buyers. Firstly, it may be a straightforward turnaround, or the location may lend itself to redevelopment, either for care or an altogether separate market.

As you can see, there are buyers for a range of care homes, be that continued use or redevelopment. The first step to establishing the likely buyer is to know what your business is worth, what its strengths and weaknesses are, therefore who it will appeal to. Additionally, the format of the sale can make a difference to tax paid on completion, so legal and financial advice should be sought earlier rather than later. Your plans may not include an immediate sale, but your exit strategy starts here.