Preparation tips from Shep Roylance to help sellers.

By Pam McDonald

It is a hot seller’s market, according to Shep Roylance, Senior Vice President of JCH Consulting Group, a full service real estate brokerage focused solely on the long-term care industry, and a Senior Housing Forum partner. But uncertainty about healthcare legislation, coupled with increased competition for quality assets has led to heightened diligence by buyers.

Shep says, “Buyers aim to evaluate, mitigate, and price the perceived risk related to healthcare transactions. This means an increasingly rigorous due diligence process by prospective buyers.” He offers the following preparation tips to help sellers.

The Twelve Tips

  1. Be prepared to provide 3 years of financial statements as well as a year-to-date financial statement. Your broker should ask for but make sure he or she has a list of all benefits of ownership that might be added back to the facility’s earnings before interest, taxes, depreciation and amortization (EBITDA). Banks will also look for an industry average 5% management fee for underwriting.

  1. Be prepared to provide 3 years of tax returns and the current year’s extension, if filed.

  1. Be prepared to provide 3 years of census data, by payer.

  1. Identify and produce all provider agreements.

  1. Be prepared to demonstrate compliance with billing and reimbursement as well as payment regulations or to show what remedial steps will be taken to resolve any issues prior to closing.

  1. Be prepared to comply with regulatory provisions and provide the community’s last 2 year’s of state (and federal, if applicable) surveys, along with any plans of correction (POC).

  1. Be prepared to provide the last two payroll runs.

  1. Be prepared to provide copies of any collective bargaining agreements.

  1. Be prepared to provide evidence of ownership and a survey. Be sure to disclose any environmental issues that might exist.

  1. Be prepared to provide all information relating to licenses and certifications relevant to the operation, including healthcare licenses, certificates of need, and local business licenses.

  1. Confirm that all ongoing litigation is covered by insurance and that anticipated liability is within policy limits.

  1. Compile a detailed schedule of fixed assets and inventory. Identify whether any assets are leased or subject to liens and, if so, provide the underlying lease or debt instruments. Identify which assets may not be transferred to the buyer because they are owned by other parties.

That Make or Break Moment

Shep points out, “The due diligence period in a transaction can make or break a transaction. A lack of preparation on the sellers part will cost money and could prevent the close.

“Alternatively, well-organized data is essential and is evidence of the seller’s professionalism, which encourages buyer confidence,” Shep states. “It demonstrates both pride of ownershp and value. It also goes a long way in ensuring a smooth transaction and a fast close.”

Find Your Next Facility with the JCH Group

The JCH Group consistently delivers the best results when it comes to the senior housing marketplace. Their team is available to you for consultations and complimentary valuations. For inquiries about services, call Shep at 805-633-4649 or visit

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