Buying a second care business: how a care group structured its next acquisition
A £1m+ share purchase of an Essex domiciliary care provider, with most of the price paid on completion and the rest deferred
By Malcolm ZoppiHealthcare
Key facts
- Deal type
- Share purchase
- Acting for
- Buyer (holding company)
- Business
- Domiciliary care provider, Essex
- Sector
- Healthcare
- Deal value
- £1m+
- Structure
- Share purchase via existing holding company; majority paid on completion, balance deferred; bank funded
- Timescale
- Scheduled to complete early 2027
- Completed
- Expected early 2027
- Lead solicitor
- Malcolm Zoppi
At a glance
Within months of its first acquisition, our client's care group agreed to buy a second CQC-registered domiciliary care provider, this time in Essex, for a price in excess of £1m with the majority paid on completion and the balance deferred. Because the group had been set up with this in mind, the holding company, the lender relationship and much of the documentation were already in place.
The client and the objective
The client is building a regional care group under a single holding company. The objective was to add a second provider quickly and on terms consistent with the first, so that the two businesses could be run and reported on together, and to keep the lender comfortable with the growing group.
The deal
- Share purchase of the entire issued share capital by the group's existing holding company.
- Price in excess of £1m, with the larger part paid on completion and the balance deferred.
- Bank funding extended to the group, with security taken over the new subsidiary.
- Seller represented by its own solicitors.
Key legal issues and how we solved them
CQC compliance and handover
As with the first acquisition, CQC had to be notified of the change in control and the registered manager and nominated individual arrangements settled before completion. The handover provisions were adapted from the first deal, covering commissioners, care packages and staff, with restrictive covenants on the outgoing owner.
Adding a subsidiary to an existing funded group
The lender's existing security over the group had to be extended to the new company without reopening the original facility. We coordinated with the lender's solicitors so that the new security and the acquisition completed together.
Consistency across the group
The warranty and indemnity package, the deferred consideration terms and the handover provisions were kept consistent with the first acquisition, so that the group has one set of protections to manage rather than two.
Outcome
Terms are agreed and the acquisition is scheduled to complete in early 2027, once the lender's security over the new subsidiary and the CQC notifications are in place. This page will be updated once it has completed.
What this deal shows
- The second acquisition is cheaper and faster than the first if the first was structured for it.
- Lenders will extend facilities to a growing group far more readily than they will fund a string of unconnected purchases.
“The second deal took a fraction of the effort of the first, which is exactly what the holding company structure was for.”