Selling your home care or home healthcare agency can be daunting. Not only must you prep the operation for would-be buyers to review, but you must also continue to serve your clients. Whether you use a business intermediary or go it alone, here are 10 key steps to a successful sale.
Pricing the Operation. It is crucial that you correctly price the operation for sale. Most agencies do not sell because they are overpriced. The market is unforgiving to overly priced agencies. Be sure to offer a price that appears reasonable and inline with other agencies currently for sale.
Presenting the Operation to Prospective Buyers. Buyers want to understand your operation. How do you make money? How can the new owner grow the operation? Are the financial statements in order? Is the operations manual or playbook available for review? Do the employees know what to do when the owner is not there?
Marketing the Operation. This is tricky. Best practices suggest that you use a third party to anonymously market the business. You could lose clients if they find out you are selling the operation. Or, your employees might seek other employment for fear of losing their jobs.
Previewing Prospective Buyers. You must rate each prospective buyer on one's (i) familiarity with the industry, (ii) familiarity with the local market, (iii) ability to seamlessly fit into your role, and (iv) ability to close the transaction.
Showing the Operation and Negotiating the Sale. You should show enough of the operation to give the prospective buyer a feel of what it is like to run the operation. Save the details for the due diligence activities. Based on how it goes, recommend that the prospective Buyer make an offer for the operation. Ask for a letter of interest that outlines the price and material terms and conditions of the deal.
Preparing the Purchase Agreement. Engage a business attorney to prepare the purchase agreement. Each transaction is unique so using templates is not recommended. Share your letter of interest with your attorney. Be sure the purchase agreement properly reflects what you want.
Buyer's Due Diligence Activities. Before closing the transaction, the Buyer gets an opportunity to do a deep dive into the operations. The Buyer usually has the option to withdraw from the transaction without penalty before the due diligence period expires. Unlike some residential home sales, business buyers do not usually compensate the Seller for taking the operation off the market. However, if the Buyer wants additional time beyond the negotiated due diligence period, the parties may consider compensating the Seller for that additional time.
Assisting the Buyer with Financing (if necessary). You may need to assist the Buyer in finding a banker to finance the transaction. Recently, Sellers have offered seller financing (i.e., seller takes some of the purchase price in a promissory note at closing instead of cash) as part of the transaction to assist Buyers.
Closing the Transaction. With the assistance of a business intermediary, attorney, tax advisor, and other professionals, you can close your transaction.
Post-closing Assistance. Sellers usually offer post-closing assistance to facilitate a smooth transition. This could include on-the-job training, coaching, business development activities, and guiding employees through the new work environment.
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