Enhancing Value

It is always advisable to start down the road to selling well before you actually intend to make the change. There are many different facets involved and much preparation to be considered, including the valuation. Where time allows, this can be the ideal first step towards readying your business for sale – and it can indicate potential areas for improvement in the proceeding months or even years.

Ultimately, the year before you sell your nursery you need to have a bumper ‘exit year’. Whilst buyers will give consideration to your last three years trading history, it is your most recent year upon which the vast majority of your business value will be based. Thus you need to make sure that where possible, you are running the nursery as near to full occupancy as you can. Run special offers to get parents through the door. Actively ask current parents for referrals and really make sure (if you aren’t already) that you are using your local authority funding in the right way for your nursery e.g. some fully occupied nurseries offer a 9am to 4.30pm funded session, which works to an extent because you can manage beginning and end of the day staffing; but it does also mean that for some nurseries you then have three hours every day where you are not full and not charging and no ability to do so. Even a small rise in turnover would have a significant impact on EBITDA and the resulting valuation.

Another way to help boost the value of a nursery is to minimise running costs and outgoings wherever possible. This is not about cutting corners, but rather about eliminating inefficiencies. It might involve bulk buying routine products or improving meal management so as to avoid waste. It may incorporate reducing bills for electricity and gas, (helping to minimise the business’ carbon footprint at the same time). Another thing to think about is snacks… a lot of nurseries buy snacks from their catering provider but is this something that could easily be prepared in house at a cheaper cost?

If you’re thinking about selling your day nursery in the next 2-4 years, it wouldn’t hurt to start preparing sooner rather than later. The expert team at Owen Froebel offer free, no-obligation nursery valuations and they can recommend specific recommendations to help you maximise your business and get the very most from your sale. They will also provide a full justification of their calculations to support the suggested asking price.