Transactions in the Care Sector – What has happened and What we Expect to See

Back in March 2020 we were coming down from a surge in deal activity that had been spurred on by the Spring Budget, at which Entrepreneurs’ Relief on capital gains tax was scaled back to a £1m lifetime allowance. Then the first lockdown arrived, placing the markets in a zone of uncertainty. For a short period, deal activity dropped whilst everyone tried to work out what the pandemic meant for all businesses, including those in the care sector.Since then, those within the care sector have had to work very hard to prove their resilience; having to deal with PPE shortages, increased staffing costs, managing those in isolation and shielding, infection control – to name but a few. The pandemic has highlighted to all the importance of those working in social care and hopefully this will drive change, in the form of lasting recognition.Since summer-2020 transactions have been completing within the sector – acquisitions, disposals, developments and institutional investments have all continued and we attribute this to the fact that the care sector is a resilient market and that investors are looking long term, rather than the short to medium term.Looking forward to the year ahead, there is an air of positivity; the Adult Social Care Infection Control fund has helped many operators within the sector during development of the vaccine and now, with reports that 95% of care homes in England have had all residents vaccinated, there seems to be light at the end of the tunnel.We expect to see over the next few months:

  • occupancy levels will start to rise in certain areas, particularly in specialist care scenarios such as respite, nursing and dementia;
  • increased demand for supported living and home care, especially where family members who have been providing care at home (hopefully) start the gradual return to work;
  • continued investment into the sector from institutional investors and private equity on a long-term basis, where funds remain to be deployed and other sectors (such as leisure and hospitality) are likely to have a longer recovery time;
  • investment in property to allow updates and refurbishments, in the case of existing care home stock, and to ensure new developments cater for the “new normal” in the form of larger spaces to allow social distancing, visitor pods, en-suite wet rooms and increased outdoor space;
  • increased investment in technology within the sector, including digital care plans and electronic medical records software.

If you would like advice on any particular aspect of the above, please contact the Care team to discuss how we can help you.


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