Who’s selling?

There remains a shortage of day nurseries on the market in the Midlands, as buyer demand continues to outstrip supply.

We’re seeing a slight shift in some owners’ priorities following the stress of trading through the pandemic, which is causing some to contemplate early retirement, which may result in more stock coming to the market in the near future.

Who’s buying?

There has been an increase in the number of business owners from other sectors who are keen to enter into this rewarding, needs-driven sector and acquire their first day nursery setting. This type of buyer is often popular with sellers as their business background means there are generally fewer financial hurdles.

Recruitment challenges are causing some of the smaller groups, especially those in rural areas, to acquire with a bit more caution, with many temporarily putting acquisition plans on hold until these challenges improve. However, bigger groups, which tend to be less impacted by such challenges as there is generally more flexibility around staffing when you own lots of settings, are continuing to acquire throughout the region.

What are they buying?

Day nurseries with 60 places and above as well as £100,000 EBITDA and above, are proving particularly popular, with a range of buyers, from local groups to big players in the market, keen to acquire.

Day nurseries in urban areas of major cities are of particular interest right now, for a range of reasons. As many parents return to the office and the generation of “pandemic babies” reach nursery age, there has been an increase in demand for day care options close on the commute to work. Buyers are also looking towards affluent areas, as the potential fee growth is huge in comparison to less developed areas.

There is also increased appetite for forest schools, particularly in suburban areas where there is more garden space surrounding the properties. The average parent of young children is now more tune with developmental needs – the natural environment and outdoor play areas are key to this and are something that parents will look for when picking the right setting for the child.

Interestingly, we’re also seeing a real shift in sticky stock that was previously quite difficult to sell – businesses that are perhaps struggling or not-in profit – as first-time buyers, especially, are seeing the potential that these opportunities present; a chance to turn the business around and bring it back to life.

Example of a high demand for a brilliant Midlands business

Stepping Stones day nursery, located just 5.9 miles from the centre of Birmingham in the suburb of Sutton Coldfield, sold earlier this year to Kids Planet, one of the Midland’s fastest growing nursery groups.

The business has a fantastic ethos which is exemplified by the brilliant staff team and the great location, so it was no surprise that we received multiple enquiries within hours of it coming to market. Viewings were set up within just four days, offers were received with five days, a best and final offer deadline was set up within weeks, and we agreed a sale above asking price within 30 days of marketing. This was a truly fantastic result and a testament to the quality of the business, the strength of the Midlands market, and the appetite for valuable instructions such as this.

Author

Jassi Sunner, Associate Director – Childcare & Education, Christie & Co

To find out more about the day nursery market in the Midlands, or for a confidential chat about your business, contact Jassi Sunner: [email protected] / +44 7791 979 343