Selling a children’s day care nursery

There has been a steady increase in the rate of sales and acquisition in the nursery sector, driven in part by the rise of the highly-acquisitive, private equity-backed corporate nursery chains.

By Matthew Scott, head of corporate, Vincents Solicitors

Many sellers are either looking to retire or downsize from multiple premises to a single setting. They care about their staff and the families they serve, but wish to spend less time managing their business on a day-to-day basis.

As with all advisors in this specialist sector, it is best to find one with experience of selling businesses like yours, as it’s likely they will already have numerous contacts and leads to assist - particularly with corporate nursery operators who are expanding their portfolios.

You’ll also need an accountant and solicitor to ensure the deal is structured correctly for you – be this on a share or asset sale basis. This distinction can save or cost you thousands in tax, so it’s worth fully understanding the options.

Specific issues which can delay or even de-rail a sale often relate to Ofsted registration and planning. For example, it’s crucial to check if original planning restrictions match the reality of the current setting, which may have expanded over time without securing the relevant regulatory permissions.

And double-check the position with regards to any capital grant investment which may or may not be transferable to the buyer, or may have to be repaid at the point of sale. We take our sellers through an eight-point check-list of common issues which need to be resolved prior to the buyer starting their due diligence.

Lastly, don’t take your eye off the ball during the negotiations. The deal could take three to four months to complete, during which time the business must maintain its value. A surprise Ofsted visit that goes badly, or unhappy staff or customers, can negatively affect the buyer’s valuation of the business.