The Building Blocks of Success: An A-Z of Acronyms in Children's Day Nursery Transactions

Asset Purchase Agreement: The legal agreement made between a buyer and a seller that finalises terms and conditions related to the purchase and sale of a company’s assets. For day nursery businesses, the most notable asset will be the property from which the nursery trades, which would be either a freehold or a leasehold building.

Building Reinstatement Cost: The BRC is the amount it would cost to completely rebuild a day nursery in the event of it being destroyed beyond repair, such as in the event of a fire. BRC is the terminology used when considering building insurance and business protection.

Capital Gains Tax: This is the tax payable on the profit made when you sell an asset which has increased in value.

Due Diligence: The process by which a buyer of a business or asset investigates the target by reviewing legal, financial and commercial information relating to it to support a valuation, establish whether there are any matters on which it requires further information, or uncover any issues which may require some form of renegotiation or contractual protection.

Earnings Before Interest Tax Depreciation and Amortisation: The key financial consideration on which day nurseries are valued, bought, and sold.

Full Time Equivalent: FTE is used to establish the ratio of the total number of hours of childcare taken during a period (e.g. part-time, full-time over the course of a week). An FTE of 1.0 is equivalent to a full-time child’s place/0.5 indicates half/0.2 indicates one day out of five.

Gross Internal Area: Gross Internal Area is the area of a building measured to the internal face of the perimeter walls at each floor level.

To find out more, read the full A-Z of acronyms here.