NEW ZEALAND | For many independent aged-care operators, including owners of 30 to 90 bed aged residential care facilities and home-based or community care businesses, succession is becoming less about finding a buyer and more about working out how to step back without dismantling the business they spent decades building.
That distinction matters in a sector where ownership, property, staffing and community relationships are often closely intertwined. Selling the operating business may be relatively straightforward on paper. Walking away from the people, premises and reputation attached to it can be considerably harder.
Epoch Healthcare Group founder Gabe Tuhoro said the idea for the business began during the COVID-19 pandemic, when he saw the isolation experienced by families and the operational pressure being carried by independent aged-care and community care providers across New Zealand.
His own family experience also brought the issue closer.
“Seeing the impact on my own parents and families across rest homes, hospital-level care and home care highlighted an urgent need for better support,” said Tuhoro.
His subsequent research led him towards succession rather than care delivery itself. Epoch now focuses primarily on long-standing, independently owned rest homes, aged residential care facilities and home or community care businesses whose owners are considering an exit over the next several years. Retirement villages sit outside the model.
The premise is that succession does not necessarily have to happen through one transaction.
Epoch uses what it calls a staged transition or two-stage exit, an established transaction structure adapted around the circumstances of each owner. Tuhoro describes it more simply as “Two Bites of the Pie”.
Under the first stage, Epoch acquires a majority interest and takes operational control of the care business. Responsibilities can include clinical compliance, registered nurse recruitment and day-to-day administration.
The founder can retain ownership of the land and buildings, moving from active operator to commercial landlord and continuing to receive lease income.
A second stage can allow the founder to retain an equity position in the operating business and potentially participate in future growth or a later realisation of value. Where the founder continues to own the underlying land and buildings, that structure can also provide ongoing lease income while preserving the option to realise the property value at a later point.
It gives an owner another option between continuing to carry the full operational burden and selling everything in one transaction.
The structure also separates two assets that are often treated as one: the care operation and the property underneath it.
That can be useful for owners who want to stop running the business but are not ready to dispose of the real estate. It also raises questions around how future capital expenditure, lease obligations and property investment are handled once operational control has changed.
Epoch said each transition was structured around the founder’s objectives rather than a prescribed exit date.
For owners who have spent 20 years or more in the sector, that may mean gradually withdrawing from administration while continuing to mentor incoming leadership. In some cases, the longer-term succession plan may also involve developing an existing staff member to take on greater responsibility.
That makes succession as much a workforce issue as a transaction.
The value within an established care business is not confined to its balance sheet. Experienced staff, clinical standards, relationships with families and standing within the local community are all difficult to recreate after a change of ownership.
Tuhoro said Epoch therefore looked at operational cash flow, clinical service standards and community goodwill when assessing a business rather than treating the transaction primarily as an opportunity to liquidate property assets.
Preserving that goodwill, however, does not mean leaving the business unchanged.
A new operator taking responsibility for clinical compliance, recruitment and administration will inevitably make decisions differently. Systems may change. Management responsibilities may shift. Procurement, reporting or staffing structures may need attention.
The challenge is deciding which parts of an established operation represent genuine value and which practices have remained simply because the founder has always done things that way.
Epoch has assembled an advisory group covering aged-care operations, clinical governance, registered nurse education, mergers and acquisitions, commercial law and corporate finance to support its transition model.
Tuhoro said the intention was to surround outgoing owners and incoming leadership with the expertise needed to manage that change over time.
That becomes particularly relevant when the owner is also the person who holds much of the institutional knowledge.
Independent aged-care businesses can be deeply personal operations. Owners may know residents and families, maintain relationships with staff and local health providers, and still be involved in decisions well beyond what would normally sit with a shareholder.
Removing that person abruptly can create its own risk.
A staged succession does not remove the difficult decisions around valuation, control, property or future investment. Nor will it suit every operator.
What it does raise is a more useful question for owners approaching the later stages of their careers: whether succession should begin several years before they actually intend to leave.
By the time operational fatigue forces the decision, many of the choices available to an owner may already have narrowed.
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