Too often, owners call us to inquire about selling their assisted living facility when they’re already under the gun to sell. They may be having a financial crisis, or they may just be so burned out that they can barely keep going. Unfortunately, most of these owners haven’t been preparing their assisted living facility to sell. This often leaves them either unable to sell their business and property or selling it for a much lower price than they always hoped for. As the owner of an assisted living facility, if you know your intention is to sell your business and property sooner or later, there are a number of things you can start doing to increase value to your business as well as make it an attractive purchase to a buyer.
- Get your financials in order. Keep detailed and complete financial recorders. Buyers want to be able to see precisely what money is coming in and going out. Also, by keeping better track of your income and expenses, you may see obvious expenses that can be reduced or eliminated.
- Pay more taxes. Right after increasing sales, one of the top priorities for most business owners is to reduce the amount of taxes they have to pay. As a business owner, you may be looking for every possible expense to write off, pad expenses with some personal items and services, or even keep some cash sales off the books. While it’s great to reduce your taxes, reducing the profit on your books is going to severely hurt the value of your business. Look at it this way, for every $0.25 you save on taxes by hiding profit, you’re losing $2 – $3 in value for your business. Of course, certain deductions such as depreciation, amortization, and insurance get added back to the bottom line anyway, so don’t pass up on those deductions you’re entitled to.
- Evaluate and lower expenses. Often times, business owners will pick a vendor and stick with them for years without ever exploring other options that may save money. There are a lot of owners that keep employees that are no longer necessary or continue paying for products or services that aren’t necessary. Take a close look at each of your expenses, and reach out to other vendors or suppliers to see if they can save you some money. If you want to stay with your current provider or vendor, show them the new lower quotes you received to convince them to give you a price break. Obviously, lower expenses = more profit. More profit = higher business value.
- Remove yourself from the business. A lot of business owners have trouble delegating or giving up certain responsibilities that they’ve always dealt with themselves. The problem is, most buyers don’t want to invest a lot of money into something that they’re going to have to spend 60+ hours per week operating. Make a list of all of your tasks and responsibilities, then find things that can be eliminated, taken care of by newer technology, and what responsibilities your managers or employees can handle. The better your assisted living facility can operate on its own, the more attractive it will be to buyers.
- Talk to your accountant. The way you structure the sale of your assisted living facility can be just as important as the sale price. How the purchase price is allocated can have a huge impact on your tax liability, and the best way to structure it will depend completely on your current situation. The buyer will likely propose a deal that is most beneficial to their tax situation, so be sure to get professional advice before accepting any offers.
- Clean up. While the most important aspect of a business is typically the revenue it generates, it’s still very helpful to start cleaning your facility up. A fresh coat of paint, minor repairs, and eliminating clutter or garbage will give potential buyers a much better first impression. Sometimes you have to get an outside perspective to catch the little things you may be so used to seeing that you don’t even notice anymore.
- Keep it confidential. Keep your plans to sell confidential. As soon as word gets out that you’re even just considering selling your assisted living facility, residents and employees begin to panic and look elsewhere. You could end up losing residents and key employees, which will greatly hurt your business, and its value. Ensure that you’re only sharing information with qualified buyers that have signed a non-disclosure agreement.
Selling your assisted living facility is a huge deal, so spending a little time making sure you’re getting the top dollar amount possible, and being able to sell quickly, is a worthwhile investment of your time. Of course, there may be other things for you to do to get your property and business ready to sell depending on your industry, but the steps above will give you a great start.