In the world of care business transactions, certain common challenges tend to surface during sales or purchases. To help you avoid these issues I’ve compiled a list of key examples. By addressing these proactively today, you can safeguard your business’s financial resources and save valuable time down the road.
The 3 Ps
I like to call these the 3 Ps – paperwork, permissions and pending issues. A bit dry I know, but these are really important areas, and you need to make sure you have your ducks in a row.
Just before the summer, I sold a business for a chunky sum which did not have its paperwork in order. Relevant filings were not complete, stamp duty not paid and paperwork had been lost. When you sell a business, you are usually selling a bunch of shares and how you evidence that you own these shares is via the statutory books (check you have these up to date) and share certificates/indemnities. Without these it makes it very tricky to prove ownership. In this case the company had attempted to buy back shares from employees who had left some years ago, but the paperwork was not completed properly. This meant that the shares had NOT been brought back and the exiting shareholders still owned the shares. The company had more shareholders than anticipated, the existing shareholders lost some of the value of the company and the exiting shareholders got an unexpected windfall. Not what the investors/current shareholders wanted.
Quick win – Check Companies House to ensure your filings are all up to date. As a wider exercise organise your paperwork so you have it to hand when you need it. It is a lot less stressful, and cheaper to do it now rather than when you are involved in a sale process.
Bonus quick win – create a contracts table which details start and end dates, cost per year, how you get out of the contract, key contacts and if the contract is transferable – an easy way to identify burdensome contracts and have key details to hand (which a buyer would ask for) – do this now so you can benefit too.
Have you got permission for the building you created in the garden in Covid-19 times? Have you set up the relevant permissions for the staff house you purchased to house agency/overseas workers? Have you completed your right to work (RTW) checks? This is a particular issue which is unfortunately rarely done correctly. You need to check every employee has a right to work (including British citizens) and keep evidence that a check has been done. The fines per illegal worker are just about to go up to £60,000 so there are serious consequences if you get it wrong. Home Office visits and checks are also increasing, as well as the likelihood of this bad press being publicised.
Quick win – assess what processes you have in place to check if someone has a right to work – when is the check carried out, where are evidence docs kept, who does the checks – and tweak where needed.
Bonus quick win – do you have a sponsorship licence, if not, will you need one in the future? If so, set the wheels in motion now as it can take up to 16 weeks to get approved.
Have you got any niggling issues that have been on your ‘to do’ pile for a while? Perhaps a troublesome employee, a dispute with a supplier or sorting out the right of way which people seem to help themselves to across the corner of your land. Sort these things out now, it will save you time and money in the long run.
Quick win – review your resident contracts – can you increase fees if care needs change, can you terminate the contract if you can’t meet a resident’s needs, how can you recover debt if a resident runs out of money/passes away and can you transfer a resident’s contract to a buyer? Make any tweaks needed now.
Summary | Future proof your care business
In summary, a little investment of time and money now can save you stress, time and money in the long run. Taking the time to review the 3 Ps will help you keep your affairs in order.
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And if you require any further advice so you can future proof your care business, please feel free to contact our Corporate and Commercial team and we would be happy to help. You can also view Jade’s LinkedIn profile here.