The most frequent question we receive at Senior Care Realty is what’s my property worth? The next most frequent has to be how long does it take to sell?
Let’s face it. Selling an assisted living facility or any kind of property or business can be a lot of work. The mental drain that comes from the ups and downs can be the greatest challenge. So everyone who decides to sell wants their facility sold now. But it takes some time.
Every sale is different. Some will take 90 days and others might take years. In this post, I’ll explain the typical timeline from start to finish.
Step 1 – Preparation
After you decide to sell, there are several things that you and your advisor need to accomplish. Some sellers need more time because they have more to do. The primary objective in the preparation stage is creating an offering memorandum that effectively tells the facility’s story and a marketing plan that puts that memo in front of the right audience. This normally takes about 30 days.
Step 2 – Marketing
Selling an assisted living confidentially takes a special marketing plan. While you want to attract a large number of buyers, you also want to keep your sale confidential. This can be accomplished but it can take a bit longer than just putting a sign in your front yard too. The marketing plan that we use for most projects at Senior Care Realty relies upon an established database of qualified buyers and a network of effective referral sources – this helps us get the word out quickly and quietly. So depending on your marketing plan, it often takes 30 to 90 days to market your facility and receive an offer.
Step 3 – Negotiation
Once you have an offer or a letter of intent, there is almost always some negotiation back and forth. Buyers and sellers normally have their attorneys involved in drafting a purchase agreement, which is a process that involves some back and forth discussions to iron out all the issues. (By the way, we recommend that buyers and sellers always have their attorney involved in their sale or purchase.) The negotiation step often takes 30 days or less.
Step 4 – Due Diligence/Financing/Licensing
You have a buyer and you have a contract to sell your facility. But you don’t necessarily have a deal yet. Buyers need time to complete due diligence, to obtain financing and to secure licensing to continue operating your facility. During that time, buyers generally have the right to cancel the contract if there is a problem in these or other areas. While they have the right to cancel, they normally don’t have a desire to cancel because they have also invested a lot of time and even some money into the deal by this time. Most buyers need 60 to 90 days to complete this step.
Step 5 – Closing
We often find that Step 4 runs together with Step 5, because sometimes a buyer is still waiting for their license or financing approval right up until closing. But you’re almost there, and it’s time to prepare for closing. This will involve your attorney drafting closing documents, making arrangements with the title insurance company for closing, setting up a management transition schedule and other final steps. The final step is usually about 30 days.
So here’s a summary of the steps and their time:
Step 1 – Preparation – 30 days
Step 2 – Marketing – 30 to 90 days
Step 3 – Negotiation – 30 days
Step 4 – Due Diligence, etc – 30 to 90 days
Step 5 – Closing – 30 days
Add it all up and a sale normally takes 5 to 9 months from reaching the decision to sell to closing the deal. Of course, some take a bit less and some can take a lot more time. In another post, we’ll talk about how you can help speed up the process and get to closing faster.