The Building Blocks of Success: An A-Z of Acronyms in the Commercial Property Sector
In this blog post, we break down the essential acronyms you’ll encounter when buying or selling day nursery properties, ensuring you’re well-versed in the terminology needed to successfully navigate deals.
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Courteney Donaldson
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A – 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.
B – 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.
C – Capital Gains Tax: This is the tax payable on the profit made when you sell an asset which has increased in value.
D – 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.
E – Earnings Before Interest Tax Depreciation and Amortisation: The key financial consideration on which day nurseries are valued, bought, and sold.
F – 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.
G – 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.