Buying and Selling a Nursery Business: Key Considerations for Owners and Buyers

The sale or purchase of a nursery business can typically be structured in two ways:

• The sale of the entire issued share capital of the limited company
• The sale of the business and assets operated by the nursery

Each structure has different legal, tax and practical implications, and specialist advice should be sought at an early stage.

Nursery transactions also often involve regulatory requirements, property matters, employment issues and safeguarding obligations, making them more complex than some other business sales.

Purchasing a nursery is an opportunity to acquire an established business with an existing reputation, workforce and customer base. However, buyers should undertake thorough due diligence (both financial and legal) to identify any potential risks, including:

• Regulatory compliance: Confirming the nursery complies with relevant Ofsted or equivalent regulatory requirements and holds all necessary registrations and licences. Each nursery is required to be registered with Ofsted, and occasionally the local authority (in circumstances where the nursery serves food).
• Employment matters: Reviewing contracts of employment, staffing structures and any ongoing employment disputes or liabilities. It is also key to understand if all employees hold the relevant qualifications and checks to work in a nursery.
• Property arrangements: understanding the terms of any lease or ensuring clear title to any property included within the transaction.
• Parent and local authority relationships: Assessing occupancy levels, funding arrangements and the nursery's reputation within the local community.
• Academic performance: Consider the Ofsted reports and ratings to understand whether anything needs to be improved or built upon, and whether you can achieve the desired plans post-sale.