According to Christie & Co’s Mid-Year review, there was a 20 per cent increase in nursery instructions.
Nick Brown, director & head of brokerage for childcare & education, told Nursery World, ‘We have seen an increase in the number of vendors looking to market their nursery/nurseries.
‘Some of this has been due to the normal reasons why vendors exit the sector and some just due to the current challenges they’re facing.’
The report also finds that 106 per cent of nurseries up for sale, achieved asking price – a 6.5 per cent increase on the previous year.
Brown added, ‘While quality settings are still highly sought after and impressive sales prices are being achieved, vendors may look at bringing their exit strategy forward. Nurseries sold over this period have continued in the same vein as 2022, where competitive tension has seen multiple offers being received on the vast majority of instructions.’
He said that the sales process time has increased due to ‘current market conditions, workloads of lawyers, and lenders and buyers wanting more in-depth levels of due diligence.’
The report also reveals:
- The three most active buyers acquired 53 per cent of all early years and childcare businesses sold by Christie & Co.
- While there has been a continued interest from the groups which have some form of private equity funding in the sector, there has been a 'fair share' of smaller privately owned groups expand and new entrants to the sector.
- There was a 131 per cent increase in the capacity of day nurseries sold. The average capacity was 83 places, compared with 63 places last year.
- The integration of acquisitions has been made slightly more challenging for everyone due to the shortage of staff across all qualification levels.
- According to Christie Finance, lenders are keen to support operators that ‘excel’ at providing a ‘superior’ level of provision, while ‘staying close to the day-to-day financials, and are agile enough to adapt to an ever-changing financial landscape.’
Brown concluded, ‘The first half of 2023 was in keeping with 2022. It has seen buyers concentrate on the acquisition of high-quality individual assets and premium small groups/clusters across all areas of the UK. While we can all recognise the recruitment and cost pressure challenges in the sector and the economy as a whole, we have a very busy pipeline of transactions primed for completion for the second half of the year.’
