Selling Your Assisted Living Facility
Whether you want to retire, move away or get into another business, the best option is often to sell your assisted living facility. Unlike selling a residential home, selling an assisted living facility takes more care to plan for and more work to find the right buyer.
Getting a loan to purchase an assisted living facility is also quite different than it is when buying a home. When somebody buys a new home they simple go to any bank or mortgage broker, have their credit checked and income verified, get an appraisal, then close 30 days later. When it comes to purchasing an assisted living facility, buyers must choose a lender that’s experienced and knowledgeable in working with assisted living facilities. In addition to running a credit check and verifying the buyer’s income and available funds, the lender has to do a fair amount of due diligence on the business itself to ensure that the income can support the loan payments. They also have to make sure the buyer is capable of running the assisted living business so they’re able to make their payments. The timeframe to close on an assisted living facility loan is also significantly longer. Most sales take between 90 – 120 days.
Preparing the assisted living facility to be sold
Preparing your assisted living facility to be sold involves more than some fresh paint and a little landscaping. There are many aspects of the business that should be looked at, and possibly adjusted, to make it more attractive to a buyer. While there are professionals available that can help you with this process, there are a lot of things you may be able to do on your own.
Get your finances in order
Having clean books is not only important to the buyer, but it also goes a long way to help the lender review the business and ultimately approve the loan. Make sure that your expenses are clearly categorized and all of the income is accounted for. You’ll also want to make sure that you have financials available for the previous three years.
Once you have your books in order it’s a good idea to review your expenses to see if there are any that you can cut back on to increase profit. Often times, people get comfortable with certain vendors and service providers and don’t realize that they’re paying more than they would elsewhere. You may be able to negotiate better pricing with who you’re currently using, or find a new vendor or service provider that can save you money. You may also see other areas that you can improve, such as groceries, supplies, utilities and wages. Being more conscious of the food and supplies you buy or restructuring staff schedules may be able to add more profit to the bottom line.
Pass of some respsonsibilities
If you’re the only one that knows how to do certain tasks, like accounting or finding new residents, it’s going to be difficult for a new owner to step into the business and continue running it. Start training other staff members on how to do these tasks so the business can continue to run smoothly when you’re gone. Some buyers may not want to spend as much time in the business as you do so they’ll need somebody who’s capable of running things when they’re not there.
We also discuss more ways to prepare your assisted living facility to be sold in more detail in another post.
Determining What Your Assisted Living Facility is Worth
You’ll also need to figure out what your real estate and business are worth, and what they can be sold for. Some sellers make the mistake of asking for too little and leave money on the table, while others ask for too much and are never able to sell. Asking for the right price will help you sell in a reasonable amount of time and get you a fair price. You can hire an appraiser or business valuation expert to get the most accurate valuation, or you can talk to a broker that’s experienced in selling assisted living facilities to get an opinion of value. While an appraiser will give you the most accurate value that a lender will base their decision on, it can be quite expensive. Having a recent appraisal may also help the buyer in their loan approval process and speed up the deal. However, what a property and business are appraised at and what they will actually sell for in the current market may be two different things. Discussing your situation and business with a knowledgeable broker can give you a better idea of what you can expect to be offered for your assisted living facility and will cost much less than an appraisal.
We also discuss determining the value of your assisted living facility in more detail, including different methods of valuation in another post.
How to Sell Your Assisted Living Facility
When it comes to actually selling your assisted living facility, you’ll need to gather the necessary information on the business and property, locate a capable and qualified buyer and navigate the transaction. While some owners choose to sell without the assistance of a broker, most people that go this route can wait several extra months, or even years, to find a buyer and often lose the deal in the middle of the transaction because they aren’t familiar with the process. While selling on your own to save money in commission may sound attractive, it’s important to understand that it can be a very complicated process and, in most cases, sellers walk away with less money than if they would have paid the commission to have the assistance of a broker.