The short answer: what you are actually buying
When you buy a domiciliary care agency you are buying a workforce, a book of care packages and a regulated permission to deliver them, with very little tangible asset attached. There is no building full of beds and no kitchen full of equipment. The value sits in the carers, the rotas, the council and private clients, and the Care Quality Commission (CQC) registration that lets the agency operate at all. That changes how every part of the deal works compared with buying a shop or a restaurant.
Because the value is intangible, the price is almost always set as a multiple of profit rather than a list of assets. An established agency with a settled CQC rating and a healthy private-pay mix tends to command around 3 to 6 times adjusted profit (EBITDA, meaning earnings before interest, tax, depreciation and amortisation), while a smaller or council-dependent book sits lower. We work with these businesses every week, and you can see the wider picture on our healthcare and social care accountants page.
The other thing to grasp early is that a home care agency lives and dies on the gap between delivered hours and billed hours. A rota that looks full on paper can lose 5 to 10 percent of its value to missed visits, short calls and travel time that never makes it onto an invoice. So the headline turnover figure a seller quotes is not the number that matters. The number that matters is what the agency genuinely delivered and got paid for, and surfacing that is the first job of due diligence.
Asset purchase or share purchase: the decision that changes everything
Whether you buy the trade and assets or the company shares is the first decision, and it reshapes your tax, your CQC position and your inherited risk all at once. Default to the wrong one because it is what the seller prefers, and you can end up either paying for liabilities you never priced or running unregistered on day one.
In an asset purchase you buy the agency's trade, its client contracts and its assets, and you leave the seller's company behind. You start fresh with the CQC as a new provider, TUPE moves every carer and office worker across to you on their existing terms, and you generally take only the liabilities you agree to. It gives the cleaner liability line, which is why most buyers instinctively prefer it.
In a share purchase you buy the company itself, so the legal entity that holds the CQC registration, the council framework contracts and the staff contracts does not change. Nothing needs re-registering and no contract needs reassigning, which can be a real advantage where a council framework is hard to win. The catch is that you inherit everything that company has ever done: its tax history, any unpaid sleep-in or holiday-pay arrears, any open complaints and any litigation. Sellers usually prefer a share sale because their gain qualifies for Business Asset Disposal Relief at 18 percent rather than higher capital gains rates, so expect the seller to push this route.
Neither is automatically right. The decision turns on the target's history, the value of its contracts and your appetite for inherited risk, and it should be modelled with a specialist before you sign heads of terms. For the closely related care-home version of this question, our guide on TUPE transfer for a care home acquisition walks through the same fork in detail.
What due diligence actually checks in a care agency
Due diligence on a home care agency is mostly about three things: the real revenue, the regulator's view, and the people you are about to inherit. Get those right and the rest of the deal is detail. Miss one and the bargain you thought you were getting quietly turns into a bill.
On the financial side, the work is to rebuild the numbers from the bottom up rather than trust the seller's profit figure. That means reconciling delivered hours from the electronic call monitoring (ECM) data against the hours actually invoiced, separating local authority income from private-pay income, and checking debtor days because councils routinely pay 30 to 60 days in arrears while carers are paid weekly. A book that is 90 percent council-funded behaves very differently for cashflow than one with a strong private base, a point we unpack in domiciliary care agency profit margins.
On the regulatory side, the CQC rating is the headline, but the conditions and the last inspection report matter just as much. A "requires improvement" rating with an open action plan can knock the price down or stall a council framework renewal. You also need to know whether the registered manager intends to stay, because losing the registered manager mid-deal is one of the fastest ways for an acquisition to fall over.
On the people side, the staff file is where the hidden cost lives. Underpaid travel time between visits, sleep-in or waking-night arrears, and holiday pay calculated on basic rates only can all transfer to you, and with the National Living Wage at £12.71 an hour from April 2026 the arithmetic of any back-pay claim only gets larger. HMRC actively enforces minimum wage in the care sector, so this is not a theoretical risk.
Four areas your due diligence has to cover
Each one can change the price, or sink the deal, if it is checked after completion instead of before.
Real revenue
Delivered hours from the call-monitoring data reconciled to billed hours, plus the council versus private fee split.
CQC position
Current rating, any conditions, the last inspection and whether the registered manager will stay on.
Staff liabilities
Travel-time and sleep-in minimum wage, holiday pay basis and pension arrears that transfer under TUPE.
Contracts
Whether council framework agreements are assignable, the notice terms, and how concentrated the income is.
The people and the contracts decide what a home care agency is really worth, not the office furniture.
Why CQC registration gates your completion date
CQC registration is not transferable, so on an asset deal the regulator's timetable, not your solicitor's, decides when you can actually start running the agency. This is the single point that derails more care acquisitions than anything on the tax side, because the CQC does not move faster to suit a completion date.
The mechanics differ by structure. In an asset purchase you must apply to register as a new provider for the regulated activity, or, if you already run a CQC-registered service with the same parameters, add the agency to your registration as a new location. The outgoing provider cancels theirs, the applications are submitted at roughly the same time so the CQC can link them, and in practice you should allow around 10 to 12 weeks. The official position is set out in the CQC guidance on buying or transferring a domiciliary care agency. In a share purchase the company keeps its registration because the legal entity is unchanged, but you must still notify the CQC of the change in control and register any new nominated individual or directors.
There is a financial dimension buyers miss. As part of registering a new provider, the CQC looks at financial viability, so you need credible figures and often a cashflow forecast ready to submit. If you are putting that together, our guide on the CQC cashflow forecast for registration shows what is needed. The practical point for the deal is timing: a registered carer can keep delivering visits, but you can only legally operate as the provider once your registration is live, so that date and your completion date have to be engineered to meet.
The tax of the deal: VAT, goodwill, stamp duty and allowances
The tax of buying a care agency is usually friendlier on VAT than buyers fear, and harder on goodwill relief than they hope. Knowing which is which before you agree a price stops you overpaying for relief that never arrives.
Start with VAT. Most CQC-registered domiciliary care is a VAT-exempt welfare supply, so the seller is often not VAT registered and there is simply no VAT to consider on the sale. Where the seller is registered, an asset sale of the whole business as a going concern can qualify as a transfer of a going concern (TOGC) and fall outside the scope of VAT, provided the standard conditions are met. Either way, confirm the agency's VAT status in due diligence rather than assuming it.
Goodwill is where expectations need managing. In a care agency almost all the value is goodwill, but corporation tax relief on purchased goodwill is restricted: since April 2019 it is only available, at a fixed 6.5 percent a year, where the business also acquires qualifying intellectual property such as a registered trademark, and it is capped by reference to the value of that IP. Most home care agencies carry little qualifying IP, so in practice the goodwill you pay for often attracts no annual tax relief at all and is only recognised against a future gain when you eventually sell. That single fact frequently tips a buyer toward an asset structure for the assets that do attract relief, while weighing it against the seller's preference for a share sale.
Two more items round out the picture. Stamp duty: a share purchase carries stamp duty at 0.5 percent of the price, while an asset deal only triggers Stamp Duty Land Tax if UK land or a property lease changes hands, which for an office-based agency is often minor or nil. Capital allowances: on an asset deal you can claim allowances on the qualifying plant and equipment you acquire, modest in a domiciliary business but worth capturing. For deal structuring and the wider plan, our tax planning and advisory service models all of this before you commit. For the official rules on the goodwill regime, see HMRC's guidance on corporation tax relief for goodwill and relevant assets.
Here is how the three common approaches actually compare when you are buying a domiciliary care agency:
| What the deal needs | DIY / solicitor only | Generic accountant | LOYALS specialist |
|---|---|---|---|
| Reconciles delivered hours to billed revenue | ✗ Not their remit | ● If asked | ✓ Core of the review |
| Prices sleep-in and travel-time NMW arrears | ✗ | ✗ | ✓ Worked from the staff file |
| Maps the CQC re-registration to completion | ● Legal only | ✗ | ✓ Timed to the deal |
| Models asset versus share tax both ways | ✗ | ● Generic view | ✓ Care-specific |
| Plans the TUPE payroll cutover | ✗ | ● | ✓ First pay run ready |
| Open Mon to Sat for deal-stage questions | ✗ | ✗ Mon to Fri 9 to 5 | ✓ 10am to 7pm Mon to Sat |
This is why buyers acquiring a home care agency tend to bring a care specialist alongside the solicitor, not just a generalist for the year-end.
What this means for you: before you make an offer
If you are close to making an offer, the practical moves are about sequencing the diligence and the structure before the price is locked, not after. Most of what goes wrong in care acquisitions is fixable if it is found early and fatal if it is found late.
- Pin down the real run-rate. Ask for the call-monitoring data and reconcile delivered hours to billed hours over at least the last 12 months before you trust the profit figure.
- Split the income. Separate local authority from private-pay revenue, and check debtor days, because the funding mix decides the working capital you will need from day one.
- Read the staff file like a buyer, not an HR manager. Price any sleep-in, travel-time and holiday-pay exposure now, because under an asset deal it transfers to you under TUPE.
- Confirm the CQC picture. Rating, conditions, last inspection, and whether the registered manager is staying. Start the registration conversation 10 to 12 weeks before any target completion.
- Model both structures. Run the asset versus share comparison on tax, liabilities and CQC route before you accept the seller's preferred route.
- Check the contracts are yours to keep. Confirm whether council framework agreements are assignable and how much income sits with a single payer.
None of this is exotic. It is the difference between buying a business you understand and inheriting one you do not. You can sense-check your agency's position in a free call with LOYALS before you commit to a number.