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Childcare & Education

Our team is renowned across the day nursery and education sector as the ‘go to’ advisers, providing services to the whole early years market and looking after childcare business lifecycles, from conception to exit.

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Market Overview


Our Childcare & Education team has seen unprecedented prices for quality businesses achieved over the past 12 months, though this may level out as we continue into 2019. While a very positive year for some, 2018 has presented a divergent landscape and we expect the disparity between success and distress to widen during the year ahead.
 

Children’s Day Nurseries


Still a highly fragmented market, with around 80% of settings owned by independent operators, UK based children’s day nurseries continue to see more inbound investor interest which in turn is driving up values for the most desirable businesses.

Due to market composition, with the average size of a setting currently around 44 places, larger, purpose-built facilities continue to be developed by both group operators and sole traders alike, with many new build settings having capacities of 100+ places. Compared to some new international day nursery developments, setting sizes of circa 80-100 places remain smaller than those slowly emerging in other parts of the world.

With the development of new ‘future proof, purpose designed’ settings increasing, pressure is being placed on some local smaller providers. This is pushing many owners to reinvest in their settings and evolve in line with growing demands and expectations of parents, service users and consumers.

The past year has seen a rise in nursery closures, particularly among the smaller, less commercial, least well-funded and less viable businesses. Although this has created a new supply of vacant D1 properties coming to the market, many of these assets have either needed significant capital investment in order to reopen or, due to configuration and capacity, have proven to be no longer viable for day care purposes.

Research by NDNA highlighted a 66% increase in closures between September 2017 to 2018, attributing this to the introduction of the 30 hours of free childcare policy. As at September 2018, following a 12-month implementation, 88% of eligibility codes for 30 hours free childcare had been validated, showing that much of the impact the policy has had on the sector has occurred, however there is scope for additional pressure as take up reaches capacity for Local Authority funded places.
 

Independent Schools

 

The landscape for independent schools is mixed, with private ‘for profit’ schools typically falling into one of three groups. The elite and prestigious private UK schools have been able to maintain high occupancy and school fees, assisting in offsetting increasing operational costs.

However, mid-market schools located in pockets of London, the South East and Home Counties are having to become increasingly commercial in order to ensure a healthy financial operation and ensuring profitability with necessary financial reserves.

The private independent schools which are most at risk are those located outside of London and the South East, with significant erosion in pupil numbers and little capital to reinvest. We anticipate increased evidence of distress during 2019 for this cohort of schools as costs rise and surpluses decrease.

Distressed assets aside, we expect the independent school market to remain strong and activity is anticipated to gain pace especially across mid-market pricing points of between £5 million and £50 million.
 

Specialist Childcare


SEND schools, both day and boarding, along with children’s homes and foster care businesses are continuing to see high levels of activity as the fragmented nature of these markets provide a variety of opportunities for trade buyers and investors alike, with demand continuing to outstrip supply.

Children’s homes look set to see capital value growth during the year ahead. With local authorities beginning to increase their referrals back toward children’s homes, there is a significant shortage in supply, and this is expected to fuel demand from business property buyers during 2019.

Trade and investor interest have continued unabated during 2018, as businesses that provide specialist care and education for children and young people continue to draw interest from a wide pool of buyers.

 
Investors and Opportunities


High quality single assets remain sought after by first-time buyers, existing providers and new, prospective investors alike, and the sector is increasingly seen as an attractive investment class, offering scope for solid long-term earnings and success.

Established portfolios that can demonstrate a proven track record and a solid and experienced management team are expected to remain attractive, particularly to larger corporate groups, new international entrants and investors. High quality portfolios will continue to attract premiums, reflecting the value of how difficult it is to establish and grow a quality, successful and densely located portfolio with consistent and sustainable earnings.

Consolidation opportunities remain across many of the established childcare and education sectors with existing providers and new entrants increasingly striving to succeed via consolidation in a bid to pursue buy and build growth delivery strategies, alongside organic developments.

£1.16bn

circa aggregate value of childcare and education assets advised on
 

88

schools valued in RICS 'Red Book' compliant reports for secured lending purposes



  View all childcare businesses for sale

Childcare businesses for sale

Trends in the regions

From a regional perspective, the impact of increases to National Minimum Wage, introduction of  the Living Wage, together with increases in Business Rates and the introduction of 30 hours from September 2017, have created some tensions in some parts of the country, but not enough to dim the demand for nurseries and childcare businesses.

We have continued to sell a varied spectrum of childcare businesses from freehold and leasehold day nurseries, children’s homes, play centers and out-of-school clubs, and activity has increased significantly during this year.  Banks are not only supportive but actively encouraging their customers to expand, via acquisitions and organic developments.


London and the South

Once again, London and its surrounding areas have proved to be a hotspot for childcare activity. In London in particular, no doubt as a result of a lack of D1 availability, we are seeing huge demand from a plethora of prospective buyers, whether they are first time cash rich buyers, investors, corporate chains or smaller existing operators looking to expand. This demand is for a variety of assets, from empty D1 spaces through to larger portfolio acquisitions and prices have been driven upwards due to the lack of supply. This has created an environment in the capital, where each opportunity that comes to the market receives a tremendous amount of interest, sometimes regardless of its profitability or security of tenure.

Again the picture is much the same in the South with small group operators looking to expand as access to funding for experienced operators in particular has become easier. In the Midlands and Anglia regions the market is also buoyant with first time buyers taking on the challenge of owning their first run settings aided by the banks appetite to fund newcomers with prior experiences gained from other business sectors.

Midlands 

We have seen a sharp growth in buyers looking at key areas across the Midlands particularly in the first quarter of 2019. This comes off the back of a busy 2018 for transactions and the additional services Christie & Co provides to operators. The majority of buyers we speak to are seeking finance to purchase a day nursery, and our sister company Christie Finance helped finance several deals last year, and we see this continuing due to the increase in demand from both first time and experienced operators. 

The Midland’s has a diverse location offering, from busy city settings to areas of natural beauty,  so we see a whole mix of buyers looking for either the opportunity of relocation into a beautiful lifestyle business, to those experienced operators and corporate chains looking to boost their share of the market within the urban areas.

North, Yorkshire & North East

We have recently seen a variation of instructions come to market; profitable businesses, loss making businesses, freeholds settings, leaseholds settings, new leases on vacant premises, former pubs, out of school clubs, large unused sites of land. The fast pace in which the North children’s day nursery market is moving has been surprising and we like to think has given its equivalent in the South a run for its money. This exciting activity displays that there is a buyer for every opportunity and beauty really is in the eye of the beholder. So if you have been thinking of a possible future exit strategy, and were apprehensive about whether your business would seem attractive to a buyer, it really is worth looking it further and having a chat with us.

Scotland

Over the last 18 months the market in Scotland has improved significantly with competitive closing dates and increased transactional activity further boosted by the return of corporate activity.

Wales

The market within Wales is also becoming more active with increasing interest from buyers and new investors as new policies develop. The newly implemented Taking Wales Forward Policy commits the Welsh Government to providing 30 hours a week of government-funded early education and childcare for working parents of three and four year olds, for up to 48 weeks of the year, with adequate funding rates to ensure sustainability, nationwide implementation across Wales would be a positive development, for parents and providers alike. 

What we can offer you

Our Regional Childcare & Education team  includes 30 Chartered Surveyors, along with specialist Business Agents and Consultants located across the UK.  All of our chartered surveyors are RICS registered valuers with experience in the Childcare & Education sector. 

As well as providing valuation advice, our team has experience in business rates, consultancy, development, and landlord and tenant including: rent reviews, lease renewals, expert witness and dispute resolution.  Within our team we have a wealth of knowledge and experience which allows us to provide sound and reasoned advice.

Our Services

With experience across the entire market, from major players to independent operators, we can offer solutions tailored specifically to our clients' needs.

Independent services

  • Agency
  • Building Surveying
  • Consultancy
  • Development
  • Dispute Resolution
  • Finance
  • Insurance
  • Investment
  • Rating
  • Rent Reviews
  • Turnaround and Recovery
  • Valuation

Corporate services

  • Agency
  • Consultancy
  • Development
  • Turnaround and Recovery
  • Valuation
  • Investment
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