Complete Guide to Buying a Nursery Business

INTRO

Don’t buy a nursery business until you watch this video – How to buy a nursery business

I’ve helped many people achieve their dream of opening their own nursery and the process isn’t as difficult or time-consuming as most people think.

Despite this some people just want the ease of being able to buy an existing nursery.

So, in this video we will go over how to buy an existing nursery business and the main things you need to consider.

But first welcome to the channel.

INTRO VID

Welcome to the channel open a nursery with myself Curtly Ania, where I support you to open run and grow your own childcare business.

If you’re new here I’ve opened a few nurseries myself.

And supported numerous others to achieve their dream of opening their own. Some of which now also own multiple nurseries themselves.

I also have 100s of other people enrolled on courses as I support them to go through the process as well.

So, you’ve come to the right place if you’re considering opening your own nursery.

In the UK, children’s nurseries are a flourishing business sector that provide vital early years education to children. As a private business, nurseries can generate significant profit

If you intend to buy a nursery, you’ll need to do the right research before you commit to your purchase. Not only should you understand the industry as a whole, you must also demonstrate a capacity for responsible ownership and in most cases as purchasing an existing nursery can be very expensive, you will likely need to secure a loan to help fund the transaction.

Consider the Costs

This means that the first thing you need to consider is the cost.

You need to consider not only the cost of purchasing the business, but also the day to day running costs too which include things like staff salaries and utilities.

Research Location

Once you’ve considered all the costs, you should then look into the location of the proposed property.

Nurseries are heavily reliant on the local communities. If you’re in an area with lots of competing nurseries, it might be harder to attract new clients.

However, competition is not the only measure of success you need to look for. An area with lots of nurseries may still be lucrative if the birth rate is high and the area is affluent. Similarly, an area with very few day nurseries may not be as attractive a prospect if people in the area do not have the income to pay for childcare.

In addition to these considerations you should also think about the local area. Is the nursery easy to get to either by walking, public transport or driving? Does it have parking? Are there local parks, schools or other amenities nearby?

Search for nurseries for sale

The internet has made it a lot easier to find potential nurseries to purchase. So actually finding a nursery for sale shouldn’t be too difficult as there are many websites that advertise them including daynurseries.co.uk and christie.com.

The difficulty will be attempting to find properties at a suitable price. Another issue you might find is that many of the listings show very limited information, requiring you to contact them first.

When searching for properties, some key things you should be looking at is:

· The size of the nursery

· Whether the nursery has the freehold or leasehold. This is important as a freehold is a much more attractive proposition, and you are much more likely to successfully get a loan if you are purchasing a freehold property. Nurseries with a leasehold may take longer to purchase as well as you will need to agree with the landlord of the property and they may want to do their own checks on you.

· The reputation of the nursery, whether they have had a good or better Ofsted rating. As although the rating will be changed or removed when you take over, the reputation will still be known in the local community.

· The financial history of the business, you will want a nursery that is currently making a good income to make it an easier transition for you.

· The number of staff and current contracts

· The commercial lease agreement for the nursery premises

· the health and safety and risk management procedures currently in place

· existing contracts with suppliers and parents

· whether there are any live or potential legal disputes

If this isn’t on the listing you should be able to ask the selling agent who will be able to provide this information for you.

Transition of ownership

There are three key things you need to consider when purchasing a nursery that many overlook.

Firstly , staff contracts. When purchasing a nursery, you’ll have to negotiate with the seller and their existing staff to comply with TUPE laws. The Transfer of Undertakings (Protection of Employment) regulations (TUPE) protect existing employees during a transfer and mean you will have to take on the existing contracts of each employee.

This can make it difficult if you want to bring in your own staff and make changes to the current team. Or even if you want to change working patterns of staff, working hours or employee wages.

So, it’s important to be aware of this and look at the current contracts to see whether it aligns with what you want to do.

Secondly, Ofsted registration. Where a day nursery changes hands, or a new business is set up, the new owner must go through the registration process. Applicants for registration must be aged 18 or

over and have the right to work in the United Kingdom. Registration can be made by an individual or an organisation.

Sounds straightforward enough, but what you may not appreciate is that this registration process is incredibly thorough, taking up to 26 weeks to complete. What’s more, until such time as the registration has taken effect, your new business will not be allowed to operate.

So, you will need to negotiate with the seller to ensure that they maintain their current Ofsted registration up until you get officially registered. Otherwise, you would not be able to operate once the sale takes place.

As part of the negotiations, you should request a provision in the Sale and Purchase Agreement that the seller agrees to maintain their Ofsted registration after the completion date and until such time as your own registration has been confirmed.

In these circumstances it is normal to agree and include the following provisions in the contract: a) that the seller continues to provide some form of consultancy to the new business (it may be as little as a couple of hours a week) and b) for you, the buyer, to provide an indemnity to the seller agreeing that should Ofsted make any kind of claim against the seller with regard to the Ofsted registration, you will reimburse the seller for the amount of the claim and any associated costs. Such a claim, for example, may occur if you failed to make sure there was an adequate number of DBS checked staff to look after the children in your care during the transition period.

Also, with a new registration, this means that you are new nursery under Ofsted. So any previous Ofsted ratings are no longer attributed to you.

The final thing you will need to think about is the type of sale. Will you be doing share purchase or an asset purchase. A share purchase means you will be purchasing the whole business including it’s liabilities whether you are aware of the liabilities or not. This could mean that you take on the responsibility of any debts of the company.

An asset purchase you are just agreeing to take on the responsibility of the assets that you negotiate.

A share purchase is the quickest and easiest to do, but is also riskier.

Conclusion

As you can probably tell from the video, purchasing a nursery can be quite complex and costly.

The time-frame for completing an acquisition once you’ve decided on a property can be anywhere from 3 to 6 months, though, with more complicated acquisitions this can be longer.

With this in mind, you must ensure that you can allocate appropriate resources to the process.

From my own perspective I always find it easier and cheaper to start a nursery from scratch, especially as you can maintain a greater deal of control over the whole process.

If this is something you’re considering then this is what I support in doing. Check out the video on the screen to learn a little bit more about the process and find out how you can open your nursery in just 7 simple steps.

Though, regardless of whether you want to purchase an existing nursery or open one from scratch you can get a lot more support on the website openanursery.co.uk.

Check it out now and good luck. God bless.