A year to be proud of!
Nick Brown Valuations Director at Amberglobe, offers his views, thoughts and comments on the last 12 months activity in the childcare market from the perspective of sellers, buyers and as one of the most experienced and successful brokers in the childcare sector.
2011 has undoubtedly been a very interesting and testing year, it seems that everyone, in one way or another has been affected by the economic circumstances which we now find ourselves in. But once again the childcare sector has shown strong signs of resilience to factors beyond its control and activity from both buyers and sellers throughout 2011 has been very positive. In fact amberglobe has just reported that 2011 has been its best year to date in the total number of nursery transactions completed.
Why has this been a good year for completed sales of Nurseries
The answer to this lies in several contributory factors which start from the outset of selling. Correct, honest advice from day one is crucial. “We have numerous clients who have taken over a year before they feel they are ready to commit to the selling process, in this time we have helped them present their nursery in the best possible light and also have had time to prepare them for the oncoming process”.
Managing expectations is very important, often i speak with owners who have been advised values for their businesses which seem extremely high! this is not a new scenario but owners ‘beware’ it’s very easy to for agents and advisors to over promise and under deliver. Our view at amberglobe is simple when we advise we use methods similar to those of which will be used by anyone looking for funding.
As we all have come to realise the numbers of out and out cash buyers who require no funding or valuation have more or less become extinct. This is why we work closely with all the major valuation companies so we can provide evidence of transactions on a regular basis, this in the short and long term sets the bar for how they view values in different areas of the country.
My advice to owners would be, be very wary of anyone who seems to pluck a figure or value out of the air! Be sure to look and ask for comparable evidence, trends and even speak with former owners who have sold or used the services of that particular agent. At amberglobe we often tell sellers to see other agents as we are confident that after doing this and taking several opinions they will come back to the agent that has given the most sound, honest advice.
Who is actually buying?
The answer to this question varies to which part of the market your nursery positions itself. The demand for smaller leasehold and freehold nurseries is exceptionally strong, we believe this has been and is still being driven by first time buyers entering the market via redundancy from previous jobs etc or families looking to invest into their children, setting them up their first business in an industry which continues to do well.
Existing operators seem to be consolidating their current operations by acquiring competitors which add location and operational sense to nurseries which they already successfully run. Having an additional setting can help in the sharing of staff, cutting costs and give monopoly of sought after areas, which is crucial when trying to maximise the profitability of your current business. In addition to these buyers we are dealing with straight out investors who are looking for somewhere to put their money! Well run managed nurseries are a perfect solution. An example of this was earlier in the year we were approached by an investor returning to the country from sometime abroad, unsure where to put his money for the best return we helped he take his first steps into the childcare sector where he acquired a small group of 4 day nurseries and has subsequently gone on to add 2 more. So the good news is that there has been and still is, plenty of active purchasers looking at both small and large leasehold and freehold settings.
Fighting your corner!
It’s imperative that as a seller you look to get advice from a respected broker, you need to be confident that they will see your sale through, it could be said that getting an instruction to sell a nursery is the easy bit! Marketing in a highly confidential manner, liaising with bank valuers, finding finance for buyers and recommending good solicitors is all part of the package that any good broker should be looking to offer. http://www.amberglobe.co.uk/press.aspx
