Beth Sholom (July 2023)

HJ Sims Represents Beth Sholom Home of Virginia in Strategic Divestiture

“The process to pursue a sale or affiliation couldn’t have been done without the consultative advice and managed assistance of the Sims team.  Their senior living market insight, experience, and business acumen made the entire process go smoothly, ending with the intended outcome sought by our organization.”

Mo Funk, President and CEO

Partnered Right®

Beth Sholom Home of Virginia (“Beth Sholom”) is a senior living organization located in Richmond, Virginia. It consists of 134 assisted living/memory care units and 101 skilled nursing beds. The organization first opened in 1946 as the first Jewish home for the aged in Virginia.

Beth Sholom reached out to HJ Sims in late 2022 to assist with reviewing affiliation and divestiture options for the organization. Not-for-profit skilled nursing and assisted living providers, like Beth Sholom, were hit especially hard by the COVID-19 pandemic, with many providers experiencing declines in census. Coming out of the pandemic operating costs also significantly increased, largely due to nursing labor shortages. These shortages often required providers to use costly nursing agency companies to staff their facilities. The cumulative effect of declines in census and lower operating margins made it difficult for nonprofits to generate enough cash flow to fund expenses, pay debt service, and reinvest in the organization.

Beth Sholom experienced similar impacts from the pandemic but was initially able to “weather the storm” due to a strong liquidity position built up over prior years and from the recent sale of its affordable independent living community. Nevertheless, Beth Sholom realized that these trends would likely be pervasive throughout the next few years and would significantly deplete its reserves. The organization proactively reached out to Sims to begin looking at partnership options to ensure the organization would be able to operate long into the future.

Structured Right®

Before beginning the search process, Sims worked with Beth Sholom and its strategy development consultant, Trilogy Connect, to determine the organization’s preferred path forward: a full divestiture to an organization that offered the highest/best price with a strong reputation in the industry or an affiliation with another not-for-profit organization. The main benefit of a full divestiture would be to generate excess sales proceeds above its existing debt amount to use towards other strategic initiatives. An affiliation, on the other hand, would ensure the organization would retain its not-for-profit status and a level of influence over the future of the organization (typically through retaining board seats).

Sims and Trilogy met frequently with management and a small subset of the Board to discuss these options. Ultimately, Beth Sholom preferred pursuing a full divestiture over an affiliation due to 1) the ability to generate excess sales proceeds for future initiatives and 2) the organization’s concern with the limited amount of control over the future of the organization through an affiliation. Further, Beth Sholom sought to solicit a small pool of buyers and potential affiliation partners based on specific criteria. These guidelines included: experience operating in Virginia, quality of health care services, and experience with acquisitions or affiliations. These criteria were aimed at ensuring a high-quality health care provider with experience in community transitions would be selected.

With the criteria in place and a pool of buyers and affiliation partners selected, Sims drafted a confidential information memorandum (CIM) to begin soliciting interest in the opportunity. In the CIM, Sims provided key information on the organization and showcased important opportunities for buyers to consider to improve the purchase price. For instance, Beth Sholom’s assisted living facilities each had existing HUD loans with low interest rates that could be assumed by potential buyers or affiliators. These low rates in a high interest rate environment helped generate significant interest in the opportunity.

Throughout the process, Sims worked with Beth Sholom to answer questions from the bidders and host site visits. Sims set up two rounds of submitting letters of intent (LOI), with the first round due roughly four weeks after circulating the CIM and the second round due two weeks following the initial LOIs. Beth Sholom received several competitive first round LOIs. Sims prepared analyses of each LOI for management and the Board to discuss opportunities to improve each bid. Beth Sholom selected the top two bids based on price, business terms, and senior living experience. Sims then led the negotiation process with these bidders and set up interviews with the Board. After negotiations and the interview process, Beth Sholom selected the buyer that provided a competitive price and a long history of transitioning communities in Virginia. With the buyer selected and the LOI executed, Beth Sholom worked with the buyer to draft the Asset Purchase Agreement (APA).

Executed Right®

While the buyer had been selected and negotiations were underway, Sims’ role in the sale process continued by facilitating due diligence requests and opining on the legal negotiations regarding the APA. Beth Sholom and the buyer finalized the APA in the spring of 2023 and moved towards closing the sale. The sale successfully closed in early July 2023. With the sale complete, Beth Sholom will continue its hospice program and is already thinking of new ways to use the sales proceeds to serve the Jewish senior community in Virginia as a “reimagined” Beth Sholom.

For more information, please contact:

Aaron Rulnick


David Saustad


Testimonials may not be representative of the experience of other clients. Past performance is no guarantee of future results