Selling a business in the childcare and nursery business can be a complex process. Given the nature of the business there are a number of important issues that require consideration prior to placing your business for sale. These include the type of premises you operate from, your regulatory requirements, as well as staff recruitment, training and retention costs.
Using the services of experienced business sales brokers will help to pave the way for a successful sale, and reduce some of the pressure on you as the current business owner. You will need to consider the provision of warranties and indemnities further down the line, and be able to secure as smooth an exit from your business as possible.
Our expert team at Selling My Business offers extensive experience in the education industry, and the early years sector in particular. We can guide you through the legal requirements when selling your childcare or nursery business, and ensure that you receive the highest possible value from the sale in the most tax-efficient manner.
With a number of sector-specific challenges ahead, the following are just a few of the issues we can help you with.
So with due diligence in mind, are there any issues within the childcare and nursery sector that might affect the value of your business as perceived by a buyer?
Some childcare businesses are run from wholly owned premises, but others operate only under a Licence to Occupy. This is not a permanent or fixed arrangement, and may lead to buyers devaluing your business due to the risk of this licence not being renewed at some point.
Businesses in the childcare and nursery sector often operate with low profit margins due to the costly nature of the service provided. Your costs are likely to be high in terms of staffing, training, catering, and utilities, and you are obliged to meet these ever-increasing liabilities simply to provide an acceptable level of care for the children attending.
The government’s 30 hours’ free childcare initiative introduced in 2017 continues to place added administrative and financial pressure on the sector’s already overstretched resources. Inadequate government funding may lead potential buyers to consider the business unsustainable in the long-run as overheads continue to rise, or they may wish to reduce its value.
Ofsted registration can be a lengthy process for your buyer, potentially taking up to 26 weeks from start to finish. If not handled correctly this could lead to your purchaser being unable to operate once they have acquired the business, so you need to ensure there is no lag between your own registration and that of the new owner.
A number of factors are considered when valuing a childcare or nursery business. These include property-related issues such as whether you own your premises. If so, whether that is on a freehold or leasehold basis, or alternatively with the Licence to Occupy mentioned earlier.
Other considerations for valuing your business include its past financial performance, occupancy rates, skill levels of staff, reputation within the community, and how you rate against your competitors in the area.
Selling My Business has extensive expertise and practical experience of valuing and selling businesses in the childcare and nursery sector. We will ensure a realistic and fair value is reached, and that your business is presented to the market in the best light possible. Call one of our expert team to arrange a free consultation to discuss your business sale.
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