Jenna Caldwell, Director of Operations at Redwoods Dowling Kerr, shares her thoughts on behind the scenes of a childcare business sale and how to ensure a smooth transaction. Published in Nursery Management Today.
At Redwoods Dowling Kerr, we understand that agreeing a deal is only part of the journey – the real skill lies in completing it. In the fast-evolving world of childcare business sales, we’ve seen time and again that the most testing moments often arrive just as the finish line comes into view.
Navigating these final stages requires careful planning and attention to detail. Every transaction brings its own unique challenges, whether logistical, financial, or legal. Sellers and buyers alike benefit from anticipating potential hurdles early on.
Continued Consolidation in the Childcare Market
In today’s market, we’re seeing a marked increase in the number of group transactions. It’s a sign of growing consolidation across the sector, with larger operators scaling through acquisition. But with larger deals comes more complexity – multiple leases, multiple sites, and multiple moving parts. It’s not just about finding the right buyer; it’s about managing every detail between offer and completion.
Deal Hurdle Trends
Leasing complications are one of the common hurdles seen in transactions. Whether it’s renegotiating terms, transferring leases, or coordinating with new landlords, lease issues can cause major delays.
In a group transaction, having multiple landlords and renegotiating a number of leases will be a key complicating factor. Coordinating timelines and terms across different parties can add significant complexity. In our experience, proactively engaging with landlords early in the process can help anticipate potential concerns and facilitate smoother transfers.
Financing has become another challenge. Where banks previously approved funding in a matter of weeks, we’re now seeing decisions take up to four months. We believe this is a lingering hangover from Covid – banks are more cautious, and their processes slower. This is where maintaining regular communication with buyers, sellers, and lenders is vital to prevent unnecessary delays and ensure expectations remain aligned.
Delays in financing approvals can increase stress on all parties and create uncertainty. It’s therefore important that buyers prepare their finance applications well in advance and provide complete and accurate information to lenders to support timely decisions.
We sometimes come across unexpected issues around planning permission. Ofsted updated its guidelines to allow providers to use all available floor space, but many settings still operate under older planning permissions that don’t reflect this change. That disconnect can impact perceived capacity and valuation.
Due diligence is another area where things can drag. Buyers rightly want to inspect everything – from staffing and safeguarding to compliance with the latest Early Years Foundation Stage (EYFS) statutory framework. With new updates affecting childminders and broader early years providers, the process is even more thorough than before.
Deal Agreed Doesn’t Mean Deal Done
It’s one thing to get a deal agreed – it’s another thing to get to completion. Inevitably, the more parties involved in a transaction, competing priorities and objectives can impact on a timetable.
The period between agreement and completion can often be the most challenging. This is when diligence in following through on all agreed terms is critical, ensuring that both parties meet their obligations to facilitate a seamless transition.
Having realistic timelines, anticipating possible setbacks, and maintaining open lines of communication with all involved parties help keep the process on track.
Recent Group Sale Examples
One recent group sale success story is that of Oxfordshire Nurseries, a respected group of four settings in southern Oxfordshire with capacity for 318 children aged 0–5. The group received a lot of buyer interest thanks to its strong local reputation, scope for expansion, and consistently ‘Good’ Ofsted ratings and multiple viewings led to several strong offers. The eventual buyer, ICP Educare Limited – an early years platform backed by Innervation Capital Partners – has worked with RDK on multiple acquisitions, including settings in Nottingham and County Durham.
The sale of Oxfordshire Nurseries is a good example of a well-matched buyer and seller, and demonstrates how alignment of vision between buyer and seller can facilitate a transaction that supports long-term growth and continuity for the settings involved.
In another example, RDK completed the sale of Green Giraffe Day Nursery, a group of five nurseries in Wales with a combined capacity of 305 children. Known for their bilingual Welsh-English provision and Montessori-inspired approach, the settings achieved high Care Inspectorate Wales ratings and represented the buyer’s largest acquisition to date.
From offer acceptance through to completion, the deal was finalised in just 14 weeks due to well-motivated parties.
This transaction exemplifies how clarity of purpose and shared values between parties can contribute to an expedited and effective sale process, even in a competitive marketplace.
The Right Advisors Make the Difference
Legal, financial, and brokerage advisors play a critical role behind the scenes. The right team doesn’t just react to issues, they prevent them.
From coordinating due diligence to navigating lease or funding challenges, having a trusted and experienced lawyer, accountant, and business broker working in sync can mean the difference between prolonged delays and a smooth, successful completion. Collaboration and foresight are everything.
Contact Redwoods Dowling Kerr today for buying or selling a childcare business.
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