Navigating Regulation, Market Conditions and Best Practice

The care sector continues to see strong levels of transactional activity, with care homes remaining an attractive asset class for a wide range of buyers, including owner-operated regional groups and private equity-backed platforms. Buying and selling a care home however is fundamentally different from many other business transactions. It is highly regulated, operationally complex and often, time sensitive.

The Current Care Market

Despite ongoing operational pressures, including staffing shortages, wage increases and rising costs, the care market remains resilient. Demand for quality care provisions continues to outstrip supply, underpinning strong occupancy levels and making well-run homes particularly attractive to investors.

Key current market trends include:

• Sustained investor appetite, particularly for homes with positive compliance records and experienced management teams;
• Limited supply, driven by planning constraints and high development costs, increasing competition and existing assets;
• Greater focus on quality, with buyers placing an increased weight on CQC ratings, governance frameworks and safeguarding practices during the due diligence process.

A South West Focus:

The South West remains desirable for a variety of buyers with positive levels of activity within the care market. Investor appetite has surged; however stock is limited, meaning sellers who are well-prepared and compliant are well positioned to achieve favourable outcomes

The Critical Importance of CQC Compliance

CQC registration is central to any care home transaction. Unlike many other regulated businesses, CQC registration does not transfer automatically on a sale. Buyers and sellers must carefully plan how registration will be dealt with, as this will directly impact the timing of completion and the buyer’s ability to operate the home lawfully.

Why CQC Causes Delays:

In practice, CQC is often the critical item in a transaction timetable. Applications can take several months to process, and delays can commonly arise where:

• The buyer has not applied for registration early enough;
• Incomplete or inaccurate information is provided to CQC;
• The proposed registered manager has not yet been approved;
• The transaction structure (asset sale vs share sale) has not been aligned with regulatory requirements.

Where CQC approval is outstanding, buyers may be unable to complete, or completion may need to be structured with management or registration arrangements that increase the complexity and risk of both parties.

Understanding the Registration Route:

The approach to CQC will depend on how the deal is structured:

• Share Sale: The registered provider remains the same legal entity, meaning that CQC registration typically continues post-completion. Whilst this can reduce regulatory disruption, buyers must be comfortable inheriting the company’s full compliance history.

• Asset Sale: The buyer must register as a new provider with CQC. This requires a full application and approval process, which can take a significant amount of time if not properly managed.

In both instances, it is important to ensure that there will be a registered manager in place post-completion.

Early advice and engagement with either a CQC specialist or your agent is essential to ensure the transaction structure aligns with regulatory expectations and commercial objectives.

Key Requirements When Buying a Care Home:

For buyers, thorough preparation and realistic timetabling are essential.

Do:

• Start CQC discussions early and understand whether a new registration is required;
• Carry out detailed diligence on inspection reports, enforcement history and any improvement plans;
• Assess staffing arrangements carefully, including registered manager approval, training records and TUPE implications;
• Review property, planning and local authority arrangements alongside operational due diligence.

Don’t:

• Assume that CQC approval will follow quickly or automatically;
• Exchange contracts without a clear regulatory roadmap and long-stop date protection;
• Underestimate the importance of management continuity and governance frameworks;
• Rely solely on headline financial performance without understanding compliance risks.

Key Requirements When Selling a Care Home:

From a seller’s perspective, advanced preparation can materially reduce risk, delays and price renegotiation.

Do:

• Ensure that CQC ratings, policies and records are up to date and internally consistent;
• Address known issues proactively rather than waiting for buyer diligence;
• Take early advice on deal structure, tax implications and transaction timing;
• Ask questions about the financial position of your buyer to avoid delays due to potential lending issues.

Don’t:

• Assume that buyer will accept unresolved compliance issues or conditional registrations;
• Delay appointing advisers experienced in care sector transactions;
• Underestimate the time required to support the buyer’s CQC application in an asset sale.

Final Thoughts:

Care home sales and acquisitions present significant opportunities, however they require careful planning and specialist advice. CQC compliance is often the decisive factor in whether a transaction completes smoothly or becomes delayed and uncertain. By understanding regulatory requirements early, aligning transaction structure with CQC expectations and approaching the deal with realistic timescales, both buyers and sellers can significantly reduce risk.

With the care market remaining active and competitive, well-prepared operators and investors who prioritise compliance and due diligence are best places to achieve successful outcomes.

How can we Help?

If you are considering buying or selling a care home, our team would be happy to discuss your requirements. We have extensive experience advising on care home sales and acquisitions and can support you throughout the process. We provide end-to-end support through to completion. Our team can assist with the navigation of any complex property, lender and security, employment and regulatory issues that may arise throughout your transaction.

You can also complete an online enquiry form. One of the Wollens team will contact you as soon as they are available.