The acquisition of a senior living care home involves complex legal, regulatory, and operational issues. Care homes are active businesses providing essential services to a vulnerable population with complex assets from significant real estate to important contracts and potential liabilities. Transactions must therefore be approached with particular care, whether they involve a share purchase (acquiring the company that owns the care home) or an asset purchase (buying the physical property and associated assets without the corporate shell).
Share Purchase vs. Asset Purchase: Structuring the Deal
A share purchase is often the preferred route for buyers. This approach offers continuity: existing contracts with residents, employees, suppliers, and the Care Quality Commission (CQC) registration remain in place. From the residents’ and staff’s perspective, the transition appears seemless, which helps maintain a sense of security and stability.
However, a share purchase carries with it all the liabilities of the target company—both known and hidden as well as those unforeseen. Historical tax issues, employment disputes, regulatory non-compliance, or even data protection breaches will belong to the buyer through ownership of the target company. Accordingly, thorough due diligence, backed by robust warranties and indemnities, is essential. It also does not negate the need for a buyer to understand and assess the assets of the business it is acquiring, including understanding any provisions in contracts affected by a change of control.
In contrast, an asset purchase can limit liability exposure by allowing the buyer to acquire only specific assets (e.g. property, contracts, goodwill). But it introduces operational complications. The buyer must apply for fresh CQC registration, which can take several months. Until registration is granted, the new owner cannot legally operate the home—potentially leaving the business in limbo unless transitional arrangements are agreed. It pays dividends to agree from the beginning the scope of the assets and liabilities being acquired and making sure these are clearly negotiated with the seller, and again, robust warranties and indemnities are needed for buyer protection.
CQC Compliance: A Central Concern
CQC regulation is the cornerstone of care home transactions. As the statutory regulator of care services in England, the CQC must be notified of any changes in control. In a share purchase, a change of control notification must be submitted, and the incoming provider must meet the “fit and proper person” requirements. The CQC will assess financial standing, governance arrangements, and experience in running regulated services.
In asset sales, the buyer must apply for a completely new registration, which includes submitting a Statement of Purpose, demonstrating staff competency, confirming operational readiness, and passing a pre-registration interview. The application process is rigorous and can significantly delay completion unless factored in from the outset.
Failure to secure appropriate CQC authorisation can be catastrophic – even rendering the buyer unable to operate the home, risking enforcement action, and exposing all parties to serious reputational and financial consequences.
Operational Continuity and Risk: Staffing, Stock and Equipment
A care home is a highly operational business. Beyond bricks and mortar, it relies on a fully trained and retained workforce, sufficient medical supplies, appropriate equipment, catering arrangements, laundry services, and IT systems. As everyone in the industry knows, there is no such thing as a day off (or even an ‘off day’) in managing a care home. A key part of buyer due diligence must focus on whether the business is effectively “fit for purpose” on day one and can be taken over safely and with sufficient staffing and other resourcing.
In both share and asset deals, it is vital to identify whether essential items—such as medical supplies, manual handling equipment, beds, hoists, and PPE—are included in the sale (or are included with the target company). Often, a surprising number of these items are leased or supplied by third parties under contracts that may not be assignable or fall away on a change of control or change of management. If a buyer assumes ownership but finds the home cannot be legally or practically operated due to missing or inaccessible equipment or medication, they may face not only regulatory censure but also liability to residents and staff.
Similarly, the presence of prescription medication and access to residents’ medical records is tightly regulated. If a handover is poorly managed, the result could be a gap in medication supply or inadequate care planning—both serious compliance breaches with potential safeguarding consequences.
It is critical that any buyer undertakes a full inventory review and operational audit as part of their due diligence, and that any transition is governed by clear agreements between buyer and seller to bridge any operational gaps post-completion.
Employment and Resident Considerations
Senior care homes often attract and retain experienced staff who are central to the quality of care provided. In a share sale, the legal employer does not change, but the transaction may still impact morale and retention. Buyers should engage early with senior staff and consider offering retention bonuses or integration plans to reduce disruption. A buyer must think always about how, over time, it will align the terms of employment for the staff of its new business with those of its existing employees and manage expectations on both sides.
In asset sales, TUPE (Transfer of Undertakings (Protection of Employment)) regulations apply, and staff must be transferred with their existing terms and continuity preserved. Consultations are legally required, and failure to conduct them properly can expose both buyer and seller to claims.
Resident contracts, especially in the luxury market, often contain bespoke terms—ranging from service levels and catering options to room furnishings and private healthcare access. These need careful review to ensure continuity or appropriate renegotiation. Any sudden change in operator or service quality can lead to resident complaints, regulatory scrutiny, or even litigation by families. The practical point again is to ensure robust due diligence and review, and to be aware that any bespoke terms may not align with your existing practices or policies.
Data Protection and Safeguarding: Critical Compliance Considerations
Data protection and safeguarding obligations are central to the lawful and ethical operation of a care home. Buyers must be acutely aware that personal data held by the home, particularly sensitive health information relating to residents, is subject to stringent requirements under the UK’s General Data Protection Regulations (GDPR). In a share purchase, the data controller remains unchanged, but the buyer inherits all existing data protection liabilities, including any historical breaches or non-compliance. In an asset purchase, the transfer of personal data must be carefully managed to ensure a lawful basis for processing post-completion, often necessitating updated privacy notices and, in some cases, resident or family consent. Failure to address these issues can result in regulatory enforcement, reputational damage, and potential civil claims.
Moreover, safeguarding risks, such as inadequate care planning, poor record-keeping, or failure to escalate concerns must be thoroughly assessed during due diligence. Any history of safeguarding incidents, whistleblowing reports, or CQC findings should be scrutinised, and robust safeguarding policies and training frameworks must be in place to ensure continuity of care and compliance from day one.
Real Estate and Lender Considerations
Whether through a share or asset deal, standard property due diligence applies. This includes verifying title, rights of access, planning permissions, and restrictive covenants. Many care homes are part of larger estates or developments, with shared infrastructure or services, which may require management company consent or compliance with overarching estate regulations.
If the care home is mortgaged, lender consent will be needed. In some cases, lenders may impose additional conditions or require partial redemption. For buyers using leverage, financing agreements should dovetail with the regulatory timetable to avoid costly delays.
Conclusion
Buying a private senior living care home involves far more than exchanging contracts. These are sensitive, highly regulated businesses whose residents depend on continuity of care. Legal advisors must work closely with operational, HR, and regulatory teams to ensure a smooth transition. With thoughtful structuring, rigorous due diligence, and robust regulatory compliance, such transactions can proceed smoothly—safeguarding both commercial value and resident welfare.