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Thinking of buying a care home? 5 due diligence checks you need to make first

THINKING OF BUYING A CARE HOME? 5 DUE-DILIGENCE CHECKS YOU NEED TO MAKE FIRST

If you’re thinking of buying a care home, congratulations! This is a big decision, and one that comes with a lot of responsibility. But before you sign on the dotted line, there are a few due diligence checks you need to make first.

Here are 5 due diligence checks you need to make before buying a care home:

  1. Check the property’s condition
  2. Research the local market
  3. Make sure the business is profitable
  4. Understand the regulatory environment
  5. Instruct specialist advisors

 

  1. Check the property’s condition

The first due diligence check you need to make when buying a care home is to assess the condition of the property from which it operates. Are there any major repairs or renovations that need to be made? Is the property up to standard? Answering these questions will give you a good idea of how much money you will need to invest upfront, as well as what kind of ongoing maintenance costs you can expect.

  1. Research the local market

Next, it’s important to do your homework on the local care home market to get an idea of what similar properties are selling for. This will help you determine whether the asking price for the care home you’re considering is fair, and it will also give you some negotiating power if it isn’t. Additionally, it’s worth taking some time to understand the demographics of the area where the care home is located – are there many potential clients nearby? What is their average income level? The answers to these questions will give you a good idea of whether there is potential for growth in this market or not.

  1. Make sure the business is profitable

Of course, one of the most important due diligence checks you need to make before buying a care home is to ensure that it is actually profitable! Care homes can be expensive businesses to run, so it’s important to have a clear understanding of all the costs involved before making any commitments. Additionally, it’s worth looking at historical financial statements and annual accounts to get an idea of how profitable the business has been in previous years and whether there are any trends that indicate future growth or decline. Finally, don’t forget to factor in your own salary when assessing profitability – after all, this is a business purchase, not an investment!

  1. Understand the regulatory environment

Another critical due diligence check to make before buying a care home is to gain a thorough understanding of the regulatory environment in which they operate. Care homes are subject to strict regulations with the Care Quality Commission (CQC), alongside everything from staffing levels and ratios to building safety and food hygiene, so it’s important that you know what these requirements are before making any commitments. Additionally, keep in mind that these regulations can be updated from time to time, so be sure to do your research!

  1. Instruct specialist advisors

Last but not least, one of the most important due diligence checks you can make when buying a care home is to seek out professional help from an experienced corporate solicitor who specialises in this industry. They will be able to provide valuable insights into things like valuation, financing, CQC handover process and negotiation strategies – all of which are critical when purchasing a care home. Additionally, they can help connect you with other professionals who can assist with due diligence, such as corporate tax advisors and accountants. Seeking professional help is an essential step in ensuring that your purchase goes smoothly and that you end up with a business that meets your expectations.

Purchasing a care home is a big decision – one that comes with a lot of responsibility. But before you sign on the dotted line, there are five due diligence checks you need to make first: checking the property’s condition, researching the local market, making sure the business is profitable, understanding the regulatory environment, and getting professional help. By taking the time to do your diligence before making any commitments, you’ll be setup for success when you purchase your care home.

For more information, please call us on 020 4571 8633 or email us at hello@birdilaw.com. Alternatively, please take a moment to complete our free enquiry form.

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