The coronavirus pandemic prompted most seniors housing and care organizations to postpone affiliation, acquisition and disposition plans. Now that the overall number of COVID-19 cases has begun to decline, however, many are getting back to discussing potential growth opportunities — and are curious how the outbreak might affect sponsorship transition activity, according to Lisa McCracken, director of senior living research and development at Ziegler.
Between January and the end of May, McCracken reported, the specialty investment bank saw 12 nonprofit transactions take place, with most of those wrapping in the first quarter of the year.
“Many of the sponsorship transitions that were underway when COVID-19 hit will likely restart once more active dialogue can take place, site visits and meetings are allowed, and organizations have the time to devote to these discussions again,” McCracken noted in a recent Ziegler newsletter article.
The firm also said that the pace of affiliations, mergers, acquisitions and dispositions likely will pick up again and in many cases even accelerate going forward.
Inevitably, McCracken noted, some communities will emerge from the pandemic financially and operationally vulnerable, primed for acquisition by operators seeking growth opportunities. The pandemic also highlighted the resource benefits that come from being part of a larger organization and network, which may lead more operators to explore affiliations.
Finally, she noted, it’s well known that roughly 50% of not-for-profit sponsorship transitions involve an existing CEO, and more often than not, a retiring CEO. Many baby boomer CEOs who had expected to retire in a few years already may be contemplating a re-evaluation of that plan.
“It is anticipated that the stressors brought on by COVID-19 will accelerate many of these retirements, opening up the opportunity to explore a sponsorship transition,” McCracken said.
