Buying or selling a care business

The CQC registration belongs to the provider, which is usually the company that runs the service. On a share purchase the company stays the same, so the registration stays with it and no new registration is needed. The CQC must still be notified of the change of control, and the registered manager and nominated individual need dealing with as part of the change. I map those regulatory steps against the completion timetable so the provider is not out of compliance at any point.

On an asset purchase the buyer must hold its own registration before it can provide care, which usually makes the registration the longest part of the timetable. That is one reason most care acquisitions I act on are share purchases.

• The CQC registration, current ratings, inspection reports and any enforcement action.
• Complaints, safeguarding matters and incident records.
• Staffing: contracts, rotas, agency use, training records and key people.
• If the business sponsors overseas care workers, the sponsor licence. The Home Office must be told about a change of ownership within a short deadline, and some structures need a new licence, so this is checked early.
• Local authority and NHS commissioning contracts, including change of control and termination rights.
• Premises: the freehold or lease of a care home, and any landlord consent needed.
• On an asset purchase, the transfer of staff under TUPE.

• Warranties on the registration, inspection history and any enforcement action.
• Specific indemnities for known issues found in due diligence.
• Deferred consideration with a right to set off warranty and indemnity claims.
• A defined handover, including introductions to commissioners, so local authority relationships carry over.
• Restrictive covenants that stop the outgoing owner competing for carers or clients.

Care acquisitions are usually funded through a mix of bank or specialist lending, the buyer’s own funds and deferred payments to the seller. Lenders look closely at commissioning contracts, CQC ratings and staffing, so the due diligence and the lender’s requirements need to run together. Buying through a holding company lets later acquisitions sit in the same group.

If you are selling, the buyer’s due diligence will focus on the same points, so it pays to have the CQC records, staff files, contracts and property documents in order before going to market. I also make sure any deferred payment is properly secured. See selling a business.

I have also acted on children’s care and early years businesses regulated by Ofsted rather than the CQC, including the sale of a day nursery and investment into a children’s care home business. The same principle applies: the registration and the structure of the deal have to be worked out together.