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Acquisition of The Boulters By Rushcliffe Care Group

What Was The Nature Of The Deal?

The acquisition of a specialist provider of children’s care services (The Boulters) by Rushcliffe Care Group.

Tell Me More About The Parties Involved

'The Boulters' has five registered homes and was originally founded in 1995 as a specialist organisation for the care and development of young people with challenging behaviour and special educational needs.  In addition it has a learning and skills centre providing education and care for 15 pupils.

Rushcliffe Care Group is one of the UK’s largest independent care home operators and the group caters for a range of care needs across the UK including learning disabilities, acquired brain injuries and rehabilitation, challenging behaviour, specialist nursing services of dementia care and has recently acquired into the specialist children’s sector.

What was HSKS Greenhalgh Corporate Finance’s Role?

HSKS Greenhalgh Corporate Finance were responsible for leading the deal, from initial contact through to completion.  This involved:

  • Initial contact with the vendor’s advisors through our own research and extensive professional network.
  • Obtaining, reviewing and assessing the Information Memorandum.
  • Meeting with the vendor and their advisors.
  • Formulating the structure of the formal offer in an innovative way to benefit both acquirer and vendor, ensuring optimum deal value and tax efficiency.
  • Submitting an indicative offer and negotiating with the vendor’s advisor throughout the short listing process, ensuring Rushcliffe Care Group were ultimately the successful bidder from the original short listed acquirers.
  • Managing the financial due diligence process, via on-line data room access and ongoing communication with vendor’s advisor.
  • Liaison with Keelys LLP in respect of legal matters and Neil Heppenstall of Lloyds TSB Corporate Markets in respect of obtaining funding.  Both of these parties are part of the Rushcliffe Care Group’s trusted advisors.
  • Provision of an ‘Investment Appraisal’ document to the bank covering the rationale of the acquisition, the benefits for the Group and the structure of the deal.
  • Meeting with the bank throughout as the deal evolved and provision of all necessary financial information.
  • Renegotiation of the deal structure following a major issue uncovered by our due diligence enquiries, resulting in serious delays and some additional legal requirements.
  • Keeping the bank on board throughout the changes and ensuring they were fully informed and comfortable with those amendments.
  • Working together with all of the relevant teams, throughout the process, to ensure both acquirer and vendor were aware of the issues and fully involved in all matters so that the process was as smooth as possible despite some difficult and, at times, unpalatable issues.
  • Providing a strong link between the tax advisors involved, owing to a major tax issue uncovered by our due diligence enquiries.
  • Preparing completion accounts as specified by the SPA, agreeing with vendor's advisors after protracted discussions, resulting in a compromise that satisfied both parties.

Why Was This Deal Particularly Complicated?

HSKS Greenhalgh Corporate Finance Manager, Simon Hopkin says, “This transaction was a particularly complicated one, primarily because of a few matters uncovered during the due diligence process that the vendor was unaware of. At times feelings were running high because of those complications and it was really important that we focussed on the important matters at hand.  Our role was very much aimed at keeping the teams working with, rather than against, each other.  Transactions always involve an element of frustration between advisors and this really stretched us all.  Eventually the transaction was completed with both sides working well together during the final push”. 

What Are The Issues Highlighted By This Particular Case Study?

HSKS Greenhalgh Corporate Finance Director, Colin Peacock, says, “This transaction really highlights how important the due diligence process is.  All too often we see healthcare transactions, in particular, being completed on the back of valuations without any real financial due diligence being carried out.  In this case this would have cost our client in excess of £500,000 in additional tax liabilities plus legal and professional fees but could have cost much more because of an illegal buy back of shares several years earlier.

“I am currently acting for a client who made an acquisition without any financial due diligence and who is currently in legal proceedings with the vendor.  The due diligence process would have uncovered the issue and potentially saved our client £700,000.  Thankfully Rushcliffe Care Group appreciates the added value that a strong Corporate Finance Team brings to any transaction.”

In Summary …

Certain funders are still keen to lend to the sector but the deal process is currently laboured and delays much more common.

Team work from all concerned will, if the numbers work, result in a successful completion.