Bond Adams Solicitors have seen a significant number of purchases of fully operating and vacant care homes. They act for some of the largest care home clients in the United Kingdom across a range of legal work. It can be a lucrative investment if you have the correct management and operational structure in place. Senior Partner, Rafique Patel discusses the legal matters to consider when investing in this sector.
If you do not have previous experience, choose a care home that is well run and has a manager who will remain post-completion to assist with a number of operational and regulatory matters.
If you buy the shares of an existing care home company, you simply advise the Care Quality Commission (CQC) of a change of directors on completion. However, as the CQC registrations are not capable of transfer if you buy the care home separately, you will have to make a new application. This is an exhaustive process and takes 3-4 months, and involves DBS checks and interviews. Ensure that you can meet with these requirements before you start.
Before purchase, check the CQC inspection ratings of the care home. These can be found via cqc.org.uk. If a care home is rated “requires improvement”, additional due diligence should be undertaken to access what will be required to improve the ratings to “good”.
Share Purchase or Asset Purchase? – You must consider the tax consequences of both along with the benefits and extensive due diligence of a share purchase.
Share purchase – Some benefits include the longstanding history of a company which may make it easier to borrow money. The due diligence is extensive as you stand in the shoes of the previous shareholders.
Asset purchase – You have the comfort of simply buying the asset. The disadvantage is that buying the company may have added tax and other historical advantages.
Claims – Often, some issues arise. Ensure that you have expert litigation lawyers on board as often issues can arise in terms of patient care, CQC compliance matters, HR matters and other matters.
Rafique Patel is a former Partner of Harvey Ingram Owston (now amalgamated into Shakespeare Martineau) and the Senior Partner of Bond Adams Solicitors.