This is Episode 8 in our series on Selling Your Assisted Living Facility. You’re reading from the second chapter about Preparing To Sell.
In the last post, we wrapped up our discussion of the first phase of Selling Your Assisted Living Facility. That was the phase of Deciding to Sell. And in this post, we begin a discussion on the next phase – Preparing to Sell.
As we begin the preparation phase, we need to start with a few big ideas and words of caution.
Patience Helps Produce Good Preparation
If you’re like most sellers, you struggled with the decision to sell. Sure, you knew you wanted to sell but you simply weren’t committed to the idea because of all the questions we covered in the last chapter that were still unanswered.
And now that you’ve decided to sell…you want your sale closed next week.
That’s understandable. Deciding to sell your assisted living facility was a stressful decision. But the stress doesn’t go away by making that decision. It will go away after the sale is closed, so you want the closing to happen as soon as possible. Again, that’s understandable.
Patience during the preparation phase and the entire sale process is important. Many things can be happening at the same time. Other things can’t begin until something else is complete. Everything takes some amount of time and shouldn’t be rushed. That’s simply the nature of the sale process.
At the same time, it’s also important that the process continue moving forward at a deliberate pace without undue pauses or delays. It’s important for everyone involved in the sale process to have a sense of urgency and to keep pressing ahead toward the eventual closing of the sale.
So while patience is necessary, it should be combined with a tendency toward action on the current steps in the process and forward-thinking about the steps ahead.
One more thing on the stress you’ll experience when selling your assisted living facility – later in this series, I’ll touch on some ways that I’ve seen sellers handle stress well and others handle it not so well. Managing stress is important for your health and the health of your business.
Good Preparation Leads to Good Results
What is good preparation? I’ll start with an example of what it’s not.
I have witnessed too many sellers that were impatient and simply wanted to start talking to potential buyers before slowing down to prepare for their sale. When buyers asked reasonable and obvious questions, the seller wasn’t always prepared to answer. And when buyers didn’t receive answers or the information they needed, red flags went up and the buyers backed away.
Worse yet for the seller, a buyer pressed ahead with limited information and made an offer early in the process. The buyer sensed the seller’s urgency and spotted some obvious opportunities to improve the seller’s facility and add value. The seller, with some patience and a little more preparation, may have been able to make those improvements and have a higher sale price.
How to Prepare For Your Sale
The best sale results come after the right preparation, including these steps:
Select your team of advisors
This isn’t time for a do-it-yourself project. You will want several people on your team to help with your sale. This starts with your attorney and CPA who should be involved early in the process. It may also eventually include your banker, insurance agent, and investment advisor. Of course, it might also include an experienced real estate broker to not only help confidentially find the right buyer but also to help guide you through the process.
Review financial performance
Before you go to market, it’s important to know your numbers and identify anything that should be improved now to avoid paying the price later. Buyers are normally buying your real estate but they’re basing value largely on your financials. Make sure they are accurate and current, and that they show as well as your building.
Find value add opportunities
There are almost always ways to add value to your facility prior to offering it for sale. Those ways might include improving occupancy, increasing rates, trimming expenses, or finding new sources of revenue.
Catch up on deferred maintenance
You might have become used to looking at a wall that needs paint, a yard that is overgrown, or furnishings that need replacement. But your buyer will spot those things on their first visit and start reducing the price for each item they realize needs to be done. Do the simple and affordable things now, and consider other ways to make your property shine.
Analyze your facility like a buyer
The financial statements and building appearance are just the beginning of what a buyer will consider. Put yourself in their shoes and analyze your facility. A buyer will have a due diligence checklist to spot problems that may not be apparent. You can run through your own checklist to help prevent problems from coming up later. (Watch for the upcoming post on this step for a due diligence checklist.)
Prepare the offering documents
Before a buyer sees your property, they will probably see an offering memo or brochure with information and pictures of your assisted living facility. And they might see a confidential teaser document even sooner unless they’ve signed a non-disclosure agreement (NDA). These documents are very important for the sale process and they should be prepared with enough, but not too much, information so that a buyer can size up your facility.
Prepare a confidential marketing plan
How do you sell your assisted living facility without letting everyone know it’s for sale? That takes a confidential marketing plan that we’ll discuss in detail later. It’s important to have a plan that provides enough exposure to reach several qualified buyers but keeps the potential sale of your facility quiet until you’re ready to share the news.
Keep your information current
Finally, this step is one that continues throughout the sale process but is important during the preparation phase, too. You may begin preparing information weeks or even months before going to market. Keep the financial and operational information you share in your offering documents current to speed up the process for buyers later and to help you stay in front of any potentially negative changes, too.
Over the next several posts, we’ll break down each of these steps in more detail to help you be prepared when you’re selling your assisted living facility.
Have a question or thought about something in this article? Leave a comment below. Thanks.