Growing under pandemic pressures
Before the pandemic Welcome Nurseries had just five sites, two in Colchester and three in the North West of England. Eight months after the group opened, Covid-19 struck and Welcome had to make a strategic decision, hunker down and wait it out or continue with its ambitious growth plans. Jonathan Jay and Linda Cuddy share their Welcome journey
They chose the latter and now have 48 settings and over 5000 childcare places, making them the 4th largest group in the UK.
However, it wasn’t without its challenges and growing a group during a pandemic with several national lockdowns provided a steep learning curve for the Welcome team.
Founded in June 2019 by Linda Cuddy and Jonathan Jay, Welcome had a five year plan to create a high quality nursery group that would be ranked as a ‘top ten’ group. It’s surprising that Welcome doesn’t have a private equity owner and Cuddy and Jay are proud that they have managed to retain the ‘family ownership’ despite the size of the group.
They don’t carry any bank debt, either. “We’ve funded the growth from our own resources”, said Cuddy, “which means we have been able to put the nurseries, children and staff first rather than profits for investors.”
Although Welcome didn’t start with a focus on a particular region of the UK, over the last two years the strategy has been clearly defined on the North and Midlands. They no longer look at nurseries to acquire outside of this area.
“At the start we looked everywhere”, said Jay, “but now that we have a very strong area management team in our North and Midlands regions it makes more sense to focus on those areas.
“In some cases we have nurseries ten minutes from each other.”
The second business strategy of Welcome is to acquire larger settings. Jay stated, “90% of our settings are 90 places or above. The handful of smaller ones just make sense geographically.”
When the first lockdown was announced in March 2020, two acquisitions Welcome were pursuing, fell apart. “With the benefit of hindsight, it was the right thing- they would not have fit with our current plans, but at the time, it felt like quite a blow,” said Jay.
The biggest challenge with buying during the pandemic was that the usual handover and building of relationships with staff and parents was not as smooth as it would have been in normal times.
Continuing, Jay said, “we just couldn’t build the same relationships as we weren’t meeting people face to face. Buying a business involves getting the staff on side and in some cases, this wasn’t as smooth as we would have liked.
“Recruitment was also not as easy, although we quickly adapted to Zoom interviews, but nothing replaces meeting people face to face.
“Sometimes we would buy a nursery and complete the purchase when the nursery was completely closed due to Covid-19, and we had to manage getting the staff back to work and the children back. One small advantage is that we could undertake refurbishment works more quickly.”
Welcome refreshes each nursery it buys, which typically includes a full redecoration, new floors and new lighting. Sometimes new toilet blocks are added, and the outside area improved.
“At one point we had a team of twelve decorators and builders working on the settings and that in itself posed its own management challenges.”
Welcome Nurseries seemed to develop a life of its own during the pandemic with Linda and Jonathan working harder than they have ever worked before with Linda based in the North and Jonathan travelling up from London every week.
Some of the nurseries hadn’t been invested in for years and the staff felt undervalued. “These nurseries have been the most challenging as imbedding new practice can take some time and there are always some people who are resistant to change.
“When a nursery has had the same owners for a long time there is a tendency for people to say, ‘this is the way it’s always been done’ and it can take many months before minds (and hearts) can be changed.
“Training has to be ongoing. Unable to do face to face training, we moved to running live Zoom trainings which have proven to be very popular and effective,” said Cuddy.
The early years sector is continually growing and although there was a hiatus of deals during the pandemic, the sector has remained investable and sustainable.
Welcome Nurseries continued to grow while many others struggled. This opened up opportunities to buy more nurseries as no one else was acquiring.
“It may have been because the chains have private equity investors who were cautious and decided to hold back until Covid-19 had passed. Welcome took a more entrepreneurial approach and were able to expand at a far faster rate.
“From agreeing to make a purchase to completing the deal typically takes six weeks. We have excellent lawyers and don’t get caught up in details that don’t make a material difference. We can value a business very quickly and as we are using our own funds, we don’t need credit approval,” Jay explained.
The speed at which Welcome can move is appreciated by sellers as delays in the acquisition process can be extremely frustrating for them.
Welcome’s business strategy has also been to buy single sites, which the larger chains often overlook. It’s more work as we have to do six transactions compared to just one acquisition of a group of six, but we are prepared to do the work that others don’t want to do.
Despite it being more work, Welcome aren’t put off by this. “We have a very long-term view for Welcome Nurseries,” explains Cuddy.
Jay said: “Yes, it’s harder work at the beginning but we have already seen how nurseries under our ownership for more than two years are running very smoothly, at high occupancy with exceptional leadership. This 24-month approach from acquisition to seamless integration allows us to imbed best practice, recruit effectively and build the management team’s expertise. There aren’t any shortcuts – it’s hard work but extremely rewarding.”
Welcome’s plan for the first three quarters of 2022 is to consolidate and strengthen, with no major acquisitions planned. Ongoing training and development are at the heart of this and Welcome’s monthly managers meetings and Zoom trainings are building a strong team for future growth.
The Welcome focus is on quality practice and imbedding this into the nursery culture and practice. This underpins the Welcome belief that all children should have access to first class childcare and education.
Date Published: April 22, 2022