Succession Planning for Care Homes

As you know, operating a care home comes with responsibilities that go beyond those in other sectors. You need to deliver care to vulnerable residents, manage the wellbeing of staff (who do an incredibly difficult job), in addition to working within the regulations set out by the Care Quality Commission. All of the day to day responsibilities make it common to delay thinking about succession or an exit from the business. In our experience, this typically leads to decisions being carried out too late leading to a reduced business valuation, uncertainty for staff and most importantly, disruption to the quality of care for residents.

Scott Sanderson, Healthcare Partner says: “By planning early, you give yourself time to prepare for a successful exit or transition of the business, securing the financial future of your care home and ensuring that your residents and staff remain supported in the future.”

Why succession planning matters

Succession planning prepares your care home business for the unexpected, such as health issues or a change in your circumstances that means a quick transition is needed.

A well-prepared care succession plan:

• Protects residents by ensuring continuity of care.
• Reassures staff that their roles and working environment are secure.
• Safeguards the future of your business and its reputation.

What are your succession options?

When you are considering succession planning you typically have two main options:

1. Passing the business to family or internal management

Firstly, you may have relatives or internal management ready to take over, this option is great for ensuring continuity and will help maintain the ethos that you have built. However, you will need to ensure that these individuals are prepared for the responsibilities and regulatory requirements involved in running the care home.

2. Selling to an external buyer

Your second option is to sell your care home to an external buyer. There are many investors and large operators that are keen to expand their portfolios, this route can offer you a clean break and the opportunity to maximise value. For some owners, it is the most straightforward way to step away from the business. However, it is important to consider this carefully. New ownership can bring changes to the culture and the way your home is run, which may affect the staff who have supported you throughout your journey.

What do I need to consider when creating a succession plan?

Before making any decisions, it is important to consider these practical and emotional factors:

• Establishing the value of your business: Knowing what your business is worth is essential for decision making and when it comes to negotiations.
• Understanding tax implications: Understanding the tax implications of your succession plan is essential. One option might deliver a higher sale price on paper, but once tax is factored in, you could walk away with less than you would from a seemingly lower offer that's structured more tax-efficiently. The most important figure is the after-tax outcome.
• Post-succession business structure: This is especially important when selling to an external buyer. Whilst you will want to secure the highest possible value from the sale, you will also want to consider how your succession plan will impact on your staff and residents. It is vital you understand what your buyer’s plans are once they take ownership, so you can be confident that your staff and the quality of care will be protected.
• Emotional and relational factors: Succession planning can sometimes cause disagreements among your management and relatives. It is important you set your expectations early and communicate openly to help avoid disputes.

The role of professional advisers

Succession planning for a care home is rarely straightforward. It often requires a coordinated approach, bringing together different areas of expertise.

At Hawsons, our corporate finance team has guided many care homeowners through successful sales and transitions. We have the experience to guide you through every stage of the process, including:

• Business valuations.
• Tax-efficient structuring.
• Exit strategy development.
• Estate and wealth planning for owners.

We can act as your lead advisers from the very start, right through to completion, and provide post-transaction support to ensure a smooth transition. Our approach is multi-disciplinary, working closely with solicitors, and the tax and financial planning experts we have in-house.

Planning ahead protects what matters most

At Hawsons, we understand that succession planning is not just about the business, it is about the people, values, and standards you have built. By planning ahead, you give your care home the best chance to thrive long after you step back.

If you are considering your options, our team is here to listen, understand your priorities, and help you create a succession plan that protects your legacy and supports a positive future for everyone involved.

Here are some case studies of some of the transactions we have recently been involved with…

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