How is the healthcare market faring in the current economy?
Monday, 12 August 2019
In recent years, business sales in the healthcare sector, specifically care homes and domiciliary care agencies, had slowed down, with buyer interest placed in the larger company acquisitions.
However, recently we’ve seen a significant increase in activity, demonstrated by recent sales and the current pipeline of sales to complete within the next few months. There has been a noticeable shift in acquirers seeking out the smaller healthcare businesses around the £1 million plus turnover as much as the larger healthcare companies up to and in excess of £10 million turnover.
Our research has shown an underlying reason for this shift is due to smaller care companies driving their businesses down the private client route. Historically funding has been sourced through social services or continuing care has been distributed through local authorities and the NHS. With charge rate cuts over a number of years and the living wage introduced back in 2016, this had a direct impact on profit margins being progressively squeezed.
Many care businesses have opted to market their services more proactively to the private paying market or more complex care to generate better cash flow and achieve higher and more sustainable margins.
This change in recent years has led to a much more stable business model that is attractive to potential acquirers. With a maturing private client base and more service users willing to pay for additional services that they would not otherwise have access to through the traditional social services route, acquisition activity is enjoying an overall noticeable peak within the SME market.
The next 6-12 months will be interesting times for the UK hanging off the result of Brexit and how that settles into what will be our new way of life. It will be business as usual for us, and we can help healthcare business owners to explore an exit route while buyer interest is high within the healthcare sector.
For more information on how we can help, please speak to your usual MHA Larking Gowen contact.
Call 0330 024 0888 or email firstname.lastname@example.org.
Corporate Finance Manager