Restructuring business advice/options

billy2shots

MSE has a wealth of knowledge and experience so I thought I would throw this out to the masses for a fresh eye to see. 

Current situation
Family business of 2 residential care homes for adults with learning disabilities.  It is a limited company with myself, mum and dad as directors. My mother manages one home (20 years) and I manage our second home (16 years). My dad is responsible for the accounts and wages as well as general maintenance. 
No mortgage or loans. 

The business owns the property I manage (7 beds) and 1/5 of the other home (9 bed). My parents own 4/5 of the 9 bed home. 


Decision time
Mum is going to retire and dad will give up his duties having really retired from his own career 10 years ago. Parents will leave by cashing in their 4/5 of the 9 bed property (£560k)and around £150k cash.
That leaves a few options 

Option 1. 
Sell the smaller home, this money is absorbed into the business then the business buys the 4/5 of the property from my parents. I will be left as the sole managing director of our 1 remaining home as well as taking over the accounts, wages and maintenance from pops. The business will own its own property. 
Least profit but least stress. 

Option 2. 
Keep both homes. Take out a business mortgage for 4/5 of the 9 bed home (£560k) which would buy out my parents leaving me as the sole director and the business owning all its  own property. I would need to employ a manager for one of the  homes in this scenario. I would have the overall responsibility for two homes (twice the stress) and have to do extra work like shopping, maintenance, invoicing, and negotiating with social services for that second home on top of running the first home with the added wages and account responsibility for 2 homes. 
Most profit but most stress. 


Option 3. 
Similar to option 2. Take out a mortgage and buy their 4/5. Instead of keeping the second home as a care home that I am responsible for I could rent the property to a company who runs a supported living business so I would have no day to day stress and would become a landlord for that home. 
Medium stress medium profits. 


Each option comes with multiple pros and cons for me, my family, the people we care for and the staff we employ. 
At the moment I'm paralyzed by analysis. 

I would appreciate any feedback regarding the options above or new ideas. 

J_B

Without prying too much into your private life, do you have a 'significant other half' and/or offspring.

What is your preference? Some thrive on stress whereas others hate it.

🤷‍♂️

billy2shots

J_B said:

Without prying too much into your private life, do you have a 'significant other half' and/or offspring.

What is your preference? Some thrive on stress whereas others hate it.

🤷‍♂️

I have a wife and two kids, 10,8. 
I already work Christmas, new years , bank holidays and have to cover sickness during the occasional weekend and evening without notice. It's hard to plan things and i have let my family  down quite a few times over the years  to go to work when we shoud have been going out as a family. 

That would all double with keeping 2 care homes. 
Keeping 1 would be the easiest thing but once the other property is sold, that's it forever which has me leaning towards option 3 and renting it out. It's personally the best option but that would mean making 13 staff redundant and having to re-home people I have supported for up to 16 years. 

Savvy_Sue

billy2shots said: 

Keeping 1 would be the easiest thing but once the other property is sold, that's it forever which has me leaning towards option 3 and renting it out. It's personally the best option but that would mean making 13 staff redundant and having to re-home people I have supported for up to 16 years. 

I just wonder though - would you have to make staff redundant, and move people, or would the staff be able to TUPE to the other company, and the residents stay in their homes? 

Have you talked this through with your accountant? They may have other suggestions. 

I have just thought of an Option 4, and possibly an Option 5 as well.

• Could you find a business partner: someone with experience of running a home who'd be interested in going into partnership with you? let them buy Mum and Dad's portion, and give them minority shares in the Ltd Company. You share the responsibility (so at least it's someone outside the family occasionally being dumped on for weekends etc ...)
• Would any of the staff be interested in a management buyout, either on the same terms as above (buying Mum and Dad's portion) or taking on the responsibility for the other home?

I'm not expressing myself well, but that's why I'd recommend discussions with your accountant. 

I think it's also worth thinking about what else you can contract out to make your life easier: for example accounts and PAYE might be better done NOT by you, and finding a good general handyman on an 'as and when' basis for the maintenance - but prepared to drop everything in an emergency for you! 

billy2shots

Savvy_Sue said:

billy2shots said: 

Keeping 1 would be the easiest thing but once the other property is sold, that's it forever which has me leaning towards option 3 and renting it out. It's personally the best option but that would mean making 13 staff redundant and having to re-home people I have supported for up to 16 years. 

I just wonder though - would you have to make staff redundant, and move people, or would the staff be able to TUPE to the other company, and the residents stay in their homes? 

Have you talked this through with your accountant? They may have other suggestions. 

I have just thought of an Option 4, and possibly an Option 5 as well.

• Could you find a business partner: someone with experience of running a home who'd be interested in going into partnership with you? let them buy Mum and Dad's portion, and give them minority shares in the Ltd Company. You share the responsibility (so at least it's someone outside the family occasionally being dumped on for weekends etc ...)
• Would any of the staff be interested in a management buyout, either on the same terms as above (buying Mum and Dad's portion) or taking on the responsibility for the other home?

I'm not expressing myself well, but that's why I'd recommend discussions with your accountant. 

I think it's also worth thinking about what else you can contract out to make your life easier: for example accounts and PAYE might be better done NOT by you, and finding a good general handyman on an 'as and when' basis for the maintenance - but prepared to drop everything in an emergency for you! 

All great suggestions thanks. 
It would very much be my choice that a new owner of the smaller home would keep all staff and residents however I don't know how much legal weight I have to decide that if any at all. So in theory I could sell the home as a care home but still have to make redundancies and fund new homes for the residents?

Option 4 regards business partner. If I'm honest, in not sure how I would cope with bringing in a partner after 20 years. iII might findpfind itmit hard not to micro  manage
but more importantly it ties my hands regarding an exit strategy whenever I may choose. That could be 3,5,10 or 15 years down the line. Being the sole director I have full flexibility I over that.

The next option is a non starter. We always like to promote from within and have successfully supported staff to gain qualifications and climb the ranks. Unfortunately no-one would be financially able to buy in and they certainly wouldn't have the necessary skills to aid the business above there current level.

We did consider outsourcing the PAYE and accounts but weighing up everything I decided I would take on that role. 

Sandtree

billy2shots said:
It would very much be my choice that a new owner of the smaller home would keep all staff and residents however I don't know how much legal weight I have to decide that if any at all. So in theory I could sell the home as a care home but still have to make redundancies and fund new homes for the residents? 

You can structure the deal however you want.. sell it as a going concern and TUPE the staff to the buyer or close down the site and lease it out as vacant possession. Some potential buyers will be interested in only one of the two options whereas others may consider either.

I have no idea how residential care works and the ability for companies to agree amongst themselves to transfer residents so will leave that to you to double check.

Whatever you do you need to understand the financial and legal implications properly before setting wheels in motion formally

Savvy_Sue

Sandtree said:

billy2shots said:
It would very much be my choice that a new owner of the smaller home would keep all staff and residents however I don't know how much legal weight I have to decide that if any at all. So in theory I could sell the home as a care home but still have to make redundancies and fund new homes for the residents? 

You can structure the deal however you want.. sell it as a going concern and TUPE the staff to the buyer or close down the site and lease it out as vacant possession. Some potential buyers will be interested in only one of the two options whereas others may consider either.

Yup, TUPE is very much what I was thinking of. If you TUPE your staff, it's the buyer who's responsible for making them redundant, not you. It's often a nasty shock to the buyer of a business: they've done costings based on three members of staff, say, and doing more of the work themselves, but then find they either have to keep paying another two members of staff, or make them redundant at their own cost. 

Savvy_Sue

billy2shots said:

Option 4 regards business partner. If I'm honest, in not sure how I would cope with bringing in a partner after 20 years. iII might findpfind itmit hard not to micro  manage
but more importantly it ties my hands regarding an exit strategy whenever I may choose. That could be 3,5,10 or 15 years down the line. Being the sole director I have full flexibility I over that.

It would absolutely have to be the right person, and the right kind of person, and definitely NOT your best mate (in case it ends in tears), and it would need a very clear business structure, and a lot of vetting and investigation, but I wouldn't immediately rule it out, because you are not going to find a perfect solution, so keeping an open mind about what the 'best' one is would be advisable. 

I'd also talk it over with your wife and parents, and see if they agree with your assessment of your tendency to micromanage. :-)

J_B

billy2shots said:

........... and i have let my family  down quite a few times over the years  to go to work when we shoud have been going out as a family.

Life's too short to be a busy fool, in my opinion. I used to be a farmer, didn't work as hard as some of my peers but family knew that for 12 days flat, I was unavailable, then on my weekend off I was mainly sleeping!!!! Gave it all up after by 52nd (?) birthday and happily tinkering with property and holiday rentals. I was *very* lucky to realise all the capital to be able to do so. Some of my peers are still busy fools - mainly the ones who won't trust anyone to look after their livestock/machinery as well as they do = busy fools!!

Could you earn enough by renting them both out????  🤔

billy2shots

J_B said:

billy2shots said:

........... and i have let my family  down quite a few times over the years  to go to work when we shoud have been going out as a family.

Life's too short to be a busy fool, in my opinion. I used to be a farmer, didn't work as hard as some of my peers but family knew that for 12 days flat, I was unavailable, then on my weekend off I was mainly sleeping!!!! Gave it all up after by 52nd (?) birthday and happily tinkering with property and holiday rentals. I was *very* lucky to realise all the capital to be able to do so. Some of my peers are still busy fools - mainly the ones who won't trust anyone to look after their livestock/machinery as well as they do = busy fools!!

Could you earn enough by renting them both out????  🤔

Keeping both going gives me the option to rent then out and live a happy life. I could retire around before 50 that route.  

J_B

billy2shots said:

Keeping both going gives me the option to rent then out and live a happy life. I could retire around before 50 that route.  

What you waiting for then?  😉😉😉