The Company is looking to secure a total funding package of $3.4 million in the form of a combination of 2,500,000 in debt financing and $900,000 in equity financing. The investment will be underpinned by the value of the real estate currently owned by the company that is the subject of the proposed acquisition, with a valuation of $3.375 million. Financial forecasts that have been prepared for the first five years of operation following the proposed company purchase, confirm that the business will be able to generate an excellent level of return to loan and equity providers.
Business & Acquisition Overview
The Company plans to purchase the issued share capital of the existing nursing home operator who owns the facility together with nine adjacent bungalows that are currently let under short term assured tenancy agreements. The current owner/operator is looking to retire and sell the business.
The care and nursing home business has operated for several years and provides residential and nursing care for up to 36 men and women aged 65+ in a homely environment. The accommodation is arranged over ground and first floors with lift access to the first floor. The care and nursing home is in a residential area and is also within easy reach of the town center and local amenities.
The purchase will be on a no cash/no debt basis with the operating company owning the freehold properties, fixtures, fittings and equipment. The purchase price for the company is $3.125 million plus the costs of acquisition and working capital. The existing business has annual adjusted EBITDA of $498,000 per year. The annual rents from the bungalow properties that are being acquired amount to $50,000 per year.
There are three key areas where the Company will develop the business of the acquired Nursing Home. These are:
- Converting the 9 bungalow properties to Supported Living Units
- Negotiating a Supply Contract with the local NHS Hospital Trust
- Establishing a Dementia Care Center of Excellence
Each of these key areas is dealt with in further detail in the pages of the full business plan.
The existing business has an annual combined sales turnover of $1,737,500 and adjusted EBITDA of $498,000.
The Company will refocus the businesses to concentrate on promoting individual and bespoke levels of care that will ensure that the homes consistently operate at over 95% capacity.
The effect of these changes will be to increase the level of annual sales to $2.348 million in year one following the purchase and EBITDA to $988,000 per year
Summary of Financial Forecasts
The detailed financial forecasts set out in the pages of the main business plan, for the business following the acquisition by Westhope can be summarised as follows:
|Year 1||Year 2||Year 3|
The projected sales and net profits indicate that substantial returns can be generated to the capital providers.