The childcare market is valued at £5.5 billion, with average fees increasing by roughly 6% and a steady rise in occupancy, which currently stands at 74%. As the nursery sector continues to show positive growth, this could be a great time to sell your childcare business.
Valuation
If you own the physical premise, you need to decide whether you want to sell the freehold or set up a lease agreement. Banks will lend buyers up to 75% of the value against a freehold nursery premise; if the business fails, the bank can sell the property to recoup their loan.
However, if the market is slow and you’re not achieving the desired sale price, arranging a lease agreement with an interested buyer may be better in the long run. Both parties must agree to the terms of the lease, the length of lease and terms will affect the end valuation.
You should list any fixtures, fittings and equipment that you intend to include in the sale. You should establish the current market value for items to make your valuation more accurate. You should also make any necessary repairs to the building; first impressions are important.
How successful your nursery is will also impact the valuation; if your repeat business and profit margins are high you can expect a more fruitful sale price for your hard work. The capacity rate for your nursery premise will also affect the sale price.
Rates of pay within the childcare sector fail to compete with comparable work, resulting in staff shortages in nurseries. Selling your business with an efficient team who have been working at your nursery for more than 3 years could be a big asset to a new nursery owner.
Marketing
Advertising the sale of your nursery online is a great way to reach out to buyers across the country. If your nursery is located in a small town or village, you could find a buyer through word-of-mouth, or by listing your business opportunity in local and regional publications.
Try contacting industry-specific magazines and trade publications to advertise your business. Speak to the contacts you’ve made while working in the sector, there may be potential leads in your own network, or perhaps your friends and family may have a contact.
It’s a good idea to keep the sale of your business discrete so that your employees don’t leave and look for work elsewhere. Once you have a serious buyer, find out if they’re keen to keep on the current team and give your employees adequate notice if necessary.
Standards
You need to keep your standards high and maintain a good work ethos throughout the sale process. If you drop the ball and your standards drop, it will be harder to sell a struggling nursery for a good price.
It’s important to maintain an excellent reputation; buyers will want to see your most recent Ofsted report during the due diligence process. Your business’s brand identity, client base, customer and employee satisfaction are also key factors in maintaining a good reputation.
Entrepreneurs keen to buy your nursery will research what other childcare businesses are within a 10-mile radius. Compare your rates, reputation, services and occupancy with your competitors and show buyers there is a sufficient rate of prospective customers in the area.
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