Following the introduction of funded childcare spaces for working parents and the influx of parents looking for childcare spaces for their little ones, buyers are looking at targets within the children’s care sector. Running a nursery can be very rewarding but comes with a range of legal and regulatory issues to navigate through.

As part of the acquisition process, a buyer will look to carry out a thorough due diligence process to ensure the care setting meets expectations. Broadly, the key considerations within educational establishments fall into the following categories:

Regulatory compliance (Ofsted/CQC inspection reports, health and safety standards and educational standards)

Understandably, there is a complexity of legislation, regulations and guidance surrounding a nursery’s operation. All nurseries must be registered with the Office for Standards in Education, Children’s Services and Skills (Ofsted). As a future owner of a nursery business, any buyer is required to go through the registration process, which can take up to a couple of months to complete. It is important to ensure all relevant applications are made as soon as possible, including for the setting itself (if required) and the change in the nominated individual. 

Ensuring the health and safety of children is paramount when acquiring a children’s nursery. The nursery environment must be safe and secure, meeting various health and safety regulations. A review should be undertaken on the key health and safety areas including building safety, hygiene standards, staff training and child protection, emergency plans and health policies. 

Contract review/fee uplifts 

As part of the acquisition process, a contractual review should be undertaken on the key commercial contracts for services, employment contracts, health and safety and insurance. Fee uplifts are an important aspect of managing the finances of a children’s nursery, ensuring that the business remains profitable while meeting the needs of children and parents. Key commercial fee uplifts to consider include:

• annual inflation;
• wage increases and minimum wage adjustments;
• operational costs;
• health and safety compliance; and 
• licencing fees.

Reviewing the contracts and fee uplifts in a children’s nursery involves a careful balance between covering rising operational costs and maintaining affordability for parents. Regular reviews and adjustments, aligned with changes in the cost structure ensure that the nursery for acquisition remains financially viable and continues to provide high-quality care and education.

Staff and HR considerations (training, certifications and employment terms)

A nursery is only as good as its staff. Therefore, key reviews should ensure the staff are appropriately qualified, that suitable employment contracts are in place and that your future employees are happy with their current arrangements.

Thorough due diligence and expert advice are crucial in navigating the complexities of this sector. By addressing these key points, buyers can mitigate risks and position themselves for a successful acquisition and operation.

If you are considering acquiring a children’s care business and would like to discuss your acquisition plans, please contact me.